Arm Holdings plc (ARM): A Bull Case Theory

We came across a bullish thesis on Arm Holdings plc on Rijnberk InvestInsights’s Substack by Daan | InvestInsights. In this article, we will summarize the bulls’ thesis on ARM. Arm Holdings plc's share was trading at $135.01 as of December 1st. ARM’s trailing and forward P/E were 173.79 and 77.52 respectively according to Yahoo Finance.

Arm Holdings (ARM) is a British semiconductor and software design company whose technology underpins nearly all smartphones and billions of connected devices worldwide. Rather than manufacturing chips, Arm licenses its processor designs to firms like Apple, Qualcomm, and Amazon, collecting license fees and royalties that create a capital-light, recurring, and highly profitable revenue stream.

Its focus on energy-efficient reduced instruction set computing (RISC) architecture has made it indispensable in mobile and increasingly relevant in PCs, data centers, automotive, and AI. The company’s ecosystem lock-in, supported by decades of developer adoption, gives it a formidable competitive moat that rivals x86 incumbents while benefiting from neutrality, scalability, and superior performance-per-watt.

Arm’s growth outlook is exceptional, driven by rising PC share, accelerating adoption in cloud data centers, expanding automotive compute needs, and AI workloads across edge and server environments. Analysts expect revenues to grow around 20–22% annually through 2030, well above semiconductor industry averages. Fiscal Q1 results were solid, with revenue up 12% year-over-year to $1.05 billion and gross margins near 98%, though higher R&D spending compressed operating margins to 39%.

The company maintains a robust balance sheet with $2.9 billion in cash and minimal debt. However, valuation remains demanding. At ~$153 per share, Arm trades near 93x FY26 earnings and a PEG of 3.2x, leaving little room for execution risk or cyclical slowdown. While long-term prospects remain outstanding, near-term upside appears limited. The analyst rates ARM as Hold, with an FY28 target price of $184 and an attractive entry point below $130 per share.

Previously we covered a bullish thesis on Arm Holdings plc (ARM) by Stock Analysis Compilation in December 2024, which highlighted its strong Armv9 momentum and diversification beyond mobile. The company’s stock has appreciated approximately by 2.20% since our coverage as growth continued across key markets. The thesis still stands as a structural growth story. Daan | InvestInsights shares a similar but more valuation-conscious perspective.

Arm Holdings plc is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 41 hedge fund portfolios held ARM at the end of the second quarter which was 42 in the previous quarter. While we acknowledge the potential of ARM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.