ARM Holdings hits 52-week high fueled by AI technology and strong earnings forecast

From MarketWatch: 2024-07-10 13:32:00

ARM Holdings plc (ARM) hit a 52-week high of $188.75 on Jul 9, closing at $182.28. The stock has surged by 156% this year, surpassing the industry’s 22% rally. The rise is attributed to the excitement around advanced AI software and hardware, with a keen eye on global and American economic landscapes.

ARM utilizes AI to design chips and software for smartphones, autos, and data centers. Major companies like Apple, NVIDIA, and Qualcomm use ARM’s chip designs for customization. The growing interest in AI technology has fueled investor enthusiasm, with ARM well-positioned in the AI ecosystem for sustained growth.

ARM forecasted 20% sequential growth in Royalty revenues for the first fiscal quarter, driven by the increased adoption of its v9 architecture. The resurgence in the smartphone market and expanding market share beyond mobile have also contributed to the boost in Royalty revenues.

The Zacks Consensus Estimate indicates a 22.1% growth in ARM’s fiscal 2025 earnings, with sales expected to increase by 23.8%. Earnings in fiscal 2026 are projected to grow by 35.2%, supporting strong top and bottom-line prospects for the company.

While ARM’s strategic position in the AI hardware market and advancements in chip design suggest long-term growth potential, the stock’s significant increase over the past year may lead to a correction soon. Trading above its 50-day moving average and in the overbought zone, investors might consider waiting for a potential price adjustment for a more favorable entry point in the market.



Read more at MarketWatch: Arm Holdings (ARM) Hits 52-Week High: What’s Next for Investors?