Based in Cambridge, England, Arm Holdings, whose chip designs are integral to nearly every smartphone globally, has seen its stock price more than double since its initial public offering last September, fueled by optimism regarding its potential gains from the AI computing boom.
For the current fiscal third quarter, Arm projects revenue between $920 million and $970 million, with the midpoint aligning with analyst expectations of $944.3 million, according to data from LSEG.
The company generates revenue through licensing fees for its chip designs and earns royalties on each chip sold that incorporates its technology.
Morgan Stanley anticipates that Arm will "at least meet expectations throughout this year, supported by a diverse range of factors."
The consensus rating among 36 Wall Street analysts for Arm's stock is "buy," with a median price target set at $145. In its second-quarter report, Arm reported a 5% increase in revenue to $844 million, surpassing analyst predictions of $808.4 million.
Year-to-date, Arm's stock has surged by 92.5%, significantly outperforming its competitors. In comparison, Advanced Micro Devices has seen a decline of 1.6%, while Qualcomm has risen by 19.7%.
Arm's forward price-to-earnings ratio stands at 75.4, which is notably higher than AMD's 30 and Qualcomm's 14.9.