Morgan Stanley Increases Arm Holdings (ARM) PT to $194 on Transformative Chip Manufacturing Shift

Arm Holdings (NASDAQ:ARM) is one of the best performing semiconductor stocks to buy now. Morgan Stanley analyst Lee Simpson raised the firm’s price target on Arm to $194 from $150, while maintaining an Overweight rating on the shares. The adjustment came as a potential shift towards chip manufacturing by Arm is gaining investor interest, viewed by Simpson as transformative.

Arm Holdings’ revenue surged by 34% year-over-year to $1.24 billion in FQ4 2025 and marked the first time quarterly revenue surpassed the $1 billion mark. This performance was driven by record royalty revenue of $607 million, which was up 18% year-over-year. Arm’s Annualized Contract Value/ACV grew 15% to $1.37 billion, although Remaining Performance Obligations/RPO saw a 10% decrease to $2.23 billion.

The FQ4 performance was largely attributed to the growing adoption of Armv9 and Compute Subsystems/CSS platforms across various sectors, such as smartphones, cloud infrastructure, and automotive systems. Armv9-based cores now contribute over 30% of royalty revenue, up from ~25% in previous quarters.

Arm Holdings (NASDAQ:ARM) architects, develops, and licenses central processing unit products and related technologies for semiconductor companies and OEMs.

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Disclosure: None. This article is originally published at Insider Monkey.