Arm Stock Has a Growth Opportunity That Extends Far Beyond Smartphones

Quick Read

• ARM stock sits 51% below its 52-week high yet trades at a sky-high 94x forward earnings, earning a HOLD with a $238 price target.

• NVIDIA and Qualcomm both run on Arm architecture yet trade at just 44x and 34x earnings, making Arm’s 261x trailing multiple look stretched.

• Data center royalties more than doubled year over year, with AGI CPU demand already exceeding $2 billion and a potential $200 billion market ahead.

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Arm Holdings (NASDAQ:ARM) trades at $223.81 after a sharp October pullback. The 24/7 Wall St. price target of $238.17 implies 6.4% upside over the next 12 months. That works out to a hold rating, and our confidence in it is high.

24/7 Wall St. Price Target Summary

Arm’s royalty engine is moving away from smartphones and toward data centers, where royalties more than doubled year over year.

The catch is that a forward multiple of 94x already prices in a lot of that change. We put fair value slightly above today’s price, and the Arm AGI CPU ramp is what decides whether the stock goes higher.

A 104% Rally Runs Into a Hard October

Shares fell 12.37% over the past week and 18.79% over the past month. Even so, they are still up 104.75% year to date. The stock sits 50.6% below its 52-week high of $452.70 and 123.8% above its low of $100.02.

In fiscal Q1 2027, revenue rose 22.4% to $1.289 billion, ahead of the $1.267 billion consensus. GAAP EPS of $0.25 missed the $0.4038 estimate. Non-GAAP EPS came in at 45 cents, above the high end of guidance. For fiscal Q2, management guided to revenue of $1.38 billion, plus or minus $50 million.

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Why Bulls See $413 Ahead

Arm Neoverse shipments have passed 1.5 billion cores. Vera from NVIDIA (NASDAQ:NVDA), Google’s Axion and AWS Graviton all run on Arm, and Arm holds about 50% CPU share among top hyperscalers. Demand for the Arm AGI CPU has exceeded $2 billion.

Management has also pointed to industry estimates of a CPU market worth $200 billion or more as agentic AI workloads grow (we studied what the early signs looked like in past major tech winners and put them in a free guide you can grab here).