ARM Holdings shares climbed 8% Wednesday, closing at $115.69 after touching $117.28 intraday. The rally followed Susquehanna’s upgrade to Positive with a $150 price target.
Arm Holdings plc American Depositary Shares, ARM
Volume hit 4.32 million shares, running 23% below normal daily activity. The move reversed recent weakness that saw the stock drop 30% over six months.
Susquehanna’s upgrade centers on ARM’s expanding AI chip work and rising per-device fees. The firm sees upside despite pressure in core smartphone and PC markets from rising memory prices.
ARM is developing a custom AI chip for OpenAI code-named Titan-1. The project includes SoftBank and Broadcom as partners. This represents ARM’s first major expansion into AI accelerators beyond traditional processors.
Production is scheduled to begin late 2026 with follow-on versions through the decade’s end. Susquehanna projects the OpenAI deal could eventually deliver over $1 billion in annual royalty revenue. That compares to roughly $2.5 billion in total company royalties expected for 2025.
Major cloud providers are rolling out in-house chips using ARM designs. Higher core counts in these processors mean bigger royalty checks per unit. ARM is also building a custom server chip for Meta, shifting from pure licensing to selling finished products for larger profit margins.
ARM is offsetting softer smartphone volumes by charging more per device. Chipmakers are migrating from v8 architecture to the newer v9 standard. The v9 design commands approximately double the royalty rate.
Current v9 adoption sits well below v8 peak levels, creating room for growth in 2026. ARM is pushing integrated chip designs with even higher fees. Samsung, MediaTek and Xiaomi have adopted this approach in premium devices.
The company beat Q2 estimates in November with $0.39 EPS versus $0.33 consensus. Revenue reached $1.14 billion against $1.06 billion expectations, up 34.5% year-over-year. Q3 2026 guidance calls for $0.37 to $0.45 EPS while full-year estimates sit around $0.90.
MarketBeat data shows a Moderate Buy consensus rating with a $175.50 average price target. UBS trimmed its target to $195 from $200 while keeping a buy rating. Citigroup downgraded from buy to hold January 13.
Institutional activity picked up in Q4. Rathbones Group boosted its position 4,638.8% to 500,043 shares worth $54.66 million. Newbridge Financial Services grew its stake 54% to 90,145 shares valued at $9.85 million.
The stock trades at a $120.81 billion market cap with a 146.60 P/E ratio. The 50-day moving average stands at $123.53 while the 200-day moving average sits at $141.46.
The post ARM Holdings (ARM) Stock: 8% Jump Fueled by AI Chip Strategy and Analyst Upgrade appeared first on Blockonomi.
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