Arm Holdings' AI-Powered Ascent: Projections Soar as Nvidia Deal Fizzles

British chip designer Arm Holdings Ltd has outlined its optimistic growth projections during an investor roadshow, anticipating an 11% increase in revenue for the current fiscal year and a substantial boost of more than 20% in fiscal 2025. 

These projections reflect the escalating demand for semiconductor chips, especially in data centers and artificial intelligence applications, Bloomberg cites knowledgeable sources. 

This revelation comes as Softbank Group Corp SFTBFSFTBY backed Arm prepares for its eagerly awaited initial public offering (IPO), with ambitions to raise $4.87 billion after its Nvidia Corp NVDA deal fell prey to regulatory opposition. 

Arm has bagged Apple Inc AAPL, Nvidia, and Alphabet Inc GOOG GOOGL as cornerstone investors in its IPO.

In its FY24 year set to conclude on March 31, 2024, the chip design company disclosed its forecasts during an investor luncheon in New York. 

Arm Holdings projects an 11% revenue growth for the current fiscal year and over 20% growth in FY25, driven by the demand for chips in data centers and AI.

CEO Rene Haas expects substantial growth with high-teen percentage increases in revenue for FY26.

According to attendees at the event, Arm's CEO, Rene Haas, highlighted the significant impact of price increases, exceeding historical expectations. 

Arm's financial performance was also detailed in the presentation, indicating an adjusted operating profit margin of 29% in fiscal 2023, with ambitious plans to expand it to 40% in the first quarter. 

The company envisions long-term operating margins of 60% and profit margins on earnings before interest, taxes, depreciation, and amortization estimated at around 65% of revenue.

The IPO is scheduled for pricing on September 13, followed by the commencement of stock trading on the subsequent day, piquing the interest of investors and industry observers alike.

Price Action: SFTBF shares closed lower by 1.62% at $43.00 on Thursday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.