Where Will Arm Holdings Stock Be in Five Years?
With shares up by 83% year to date, Arm Holdings (NASDAQ: ARM) enjoyed explosive stock price growth based on artificial intelligence (AI)-related optimism, which could boost sales for its intellectual property licensing business. But despite the hype, the company's valuation has become uncomfortably high. Let's discuss what the next five years could have in store for this booming stock.
Founded in 1990, the U.K.-based Arm Holdings is a technology company that develops and licenses intellectual property for designing central processing units (CPUs), a core component in computers, smartphones, and other electronics. After an initial public offering (IPO) in late 2023, it enjoyed a surge of interest because investors expect it to benefit from rising hardware spending as businesses scramble to handle increasingly complex AI workloads.
That said, ARM's third-quarter earnings do not show rapid AI-led transformation. Revenue grew by a modest 14% year over year to $824 million. To put that number in context, chipmaker Nvidia saw its revenue soar 265% year over year to $22.1 billion in its most recently reported quarter. These figures are not even in the same ballpark, and there could be several reasons for the discrepancy.
Source Fool.com
