What's Going On With British Chipmaker Arm Stock Monday?

British chip designer Arm Holdings Plc ARM stock shot upward on Monday. The stock is up over 30% Monday.

The stock gained 117% last week, adding close to $100 billion in market cap. Meanwhile, rival chip designer Nvidia Corp NVDA gained 7% last week.

Last week, the company reported quarterly sales of $824 million, which beat the analyst consensus of $761.62 million. Arm Holdings reported adjusted quarterly EPS of $0.29, which beat the analyst consensus of $0.25.

The company attributed its success to the rapidly increasing penetration of Armv9-based chips and strong demand for more advanced Arm CPUs as companies increase investment in AI.

Analysts lauded the Armv9-driven upside from smartphones while citing incremental gains from applications it is under-indexed today, including Data Center, Automotive, and IoT.

Last Friday, Morgan Stanley analyst Lee Simpson flagged ARM enjoying accelerating growth ahead of his expectations, given the momentum seen in AI design adoption and the outsized impact of ARMv9 in royalties, even at this early stage in the product cycle.

The analyst had an Equal-weight rating on the stock and raised the price target to $107 from $55.

Simpson adjusted his fiscal 2024-2026 estimates, increasing in particular, his fiscal 2026 sales to $4.85 billion and EPS to $2.15 (prior $4.18 billion and $1.70) given the momentum he noted in AI adoption and v9 take-up and the associated royalty rate expansion and strong licensing.

The analyst stated that ARM is the silicon IP leader with a 60%+ share of global semiconductor IP sales, including a ubiquitous position in smartphones. Upside revolves around structural growth opportunities in the cloud and

According to the analyst, autos, including share gain and royalty rate inflections as customer designs, shift to ARM’s v9 architecture.

Price Action: ARM shares traded higher by 30.4% at $149.59 on the last check Monday.

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