Arm Holdings (ARM) is looking to bring the same energy-efficient computing to data centers that it did for mobile devices. Arm stock has rallied this year on expectations that the chip designer can expand beyond its smartphone stronghold into markets like servers to run artificial intelligence applications.
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Now, Arm is increasingly in demand as data centers look to cut their massive energy consumption, Arm Chief Executive Rene Haas told Investor’s Business Daily.
“While generative AI and complex AI have unbelievable potential, the real headwind is power,” Haas said. “These giant (AI software) models have huge demands on compute and that drives incredible needs for power. So power efficiency is paramount to solving this.”
The major cloud computing service providers are turning to Arm technology to lower their power consumption, Haas said.
Google Latest To Adopt Arm Technology
On the stock market today, Arm stock sank 12% to close at 107.56 amid a broad sell-off in semiconductor stocks. The Philadelphia semiconductor index slid 3.3% on Wednesday.
Last week, Alphabet‘s (GOOGL) Google announced its first Arm-based server processor for general-purpose computing and AI inferencing. Google said its Axion chip will provide up to 60% better energy efficiency than comparable current-generation x86-based processors.
Other hyperscale cloud service providers using Arm-based processors include Amazon.com‘s (AMZN) Amazon Web Services, Microsoft (MSFT) and Oracle (ORCL).
Nvidia (NVDA) uses Arm technology in its Grace central processing units.
“One of the ways the industry is addressing this (data-center power issue) is with Arm (technology),” Haas said. “That’s not surprising from our vantage point, given the fact that Arm’s CPU architecture was born out of building devices that were going to run on a battery.”
Arm Stock Falls Below Key Support Level
AI data centers are becoming so ravenous for power that they threaten to max out electricity grids, the Wall Street Journal reported. Unless energy savings are found, AI data centers could consume up to 25% of America’s power by 2030, vs. 4% today, Arm’s Haas told the Journal.
On Wednesday, Haas posted a blog article titled “Arm’s Mission to Help Tackle AI’s Insatiable Energy Needs.”
Arm stock is on two IBD stock lists: Leaderboard and Tech Leaders.
Until Wednesday’s move, Arm stock had been in a consolidation pattern with an official buy point of 164, according to IBD MarketSurge charts. However, in a negative sign, Arm stock closed beneath its 50-day moving average line, a key support level, on Monday. And on Wednesday, it undercut the low point of its nine-week consolidation.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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