Arm Holdings Is A 'Strong AI Play' But Not A Buy, Analyst Says

Shares of Arm Holdings PLC ARM had spiked last week on prospects of the company’s V9 architecture being used in the new A18 chip for Apple Inc's AAPL iPhone 16.

The company has a proven growth track record and opportunities to continue growing faster than Street expectations, according to Benchmark.

The Arm Holdings Thesis: While the company is a "strong AI play," the elevated growth expectations are already priced into its stock, analyst Cody Acree said in a note Monday.

“For now, we are initiating coverage with a Hold rating and setting no price target, as is Benchmark's standard practice,” Acree said.

Check out other analyst stock ratings.

"We believe the company is a unique investment property with solid leverage to the industry's fastest growth drivers, a growing position in the rapidly expanding AI and Data Center markets, and a dominant player in key industry verticals, such as smartphones and a growing participation in the AI PC market," the analyst wrote.

He added, however, that Apple's iPhone 16 will follow a "piece-meal AI strategy," with Apple Intelligence being launched sometime next month in the U.S. followed by a staggered rollout globally.

Arm's stock trades at twice the forward multiples of direct AI peers, such as Nvidia Corp NVDA, Advanced Micro Devices Inc AMD, Broadcom Inc AVGO and Marvell Technology Inc MRVL, Acree further stated.

ARM Price Action: Shares of Arm Holdings had declined by 4.92% to $140.12 at the time of publication on Monday.

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