Arm (ARM) Gets Buy Rating and $150 Target as Analyst Sees Triple Market Reach

Arm Holdings plc (NASDAQ:ARM) is one of the 10 AI Stocks Making Waves on Wall Street. On August 11, Seaport Global Securities analyst Jay Goldberg initiates coverage on the stock with a Buy rating and a price target of $150.00.

The firm believes Arm has revitalized itself after keeping out of the spotlight for years. The company has a big presence in the data center market and is now expanding into automotive.

“Historically, Arm was highly reliant on the mobile phone market. Mobile is still important, but the company has diversified widely beyond that. It now has considerable penetration in the data center. The company claims that 50% of data center servers now have some form of IP in them. This includes CPUs, AI head nodes, networking and other chips. This is up from 0% less than 10 years ago. We expect their penetration to grow both deeper (more substantial content) and wider (more deployments in coming years). The company also has considerable design traction in automotive, albeit on the very long time frames associated with that industry."

"Overall, the company has roughly tripled its addressable market. The company has revamped the entry-level for its products. Three years ago, the company introduced a number of changes to its licensing terms which allowed smaller companies and start-ups to more readily access Arm IP. This has shored up the bottom end of the market which had been gradually shifting to ‘open source’ RISC V. Finally, Arm is attempting to move up the value chain by providing more complete designs for chips. This could be a strong way to increase value capture, but comes at the risk of infringing on the business of some of its licensees. Arm has been very vague about its ultimate ambitions in this space. There is some room here for the company to navigate this prospect, but as of now, its course remains unclear to us.”

Arm Holdings plc (NASDAQ:ARM) is a semiconductor and software design company that designs and manufactures semiconductor technology and other related products.

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