RBC Capital Starts Arm Holdings at Outperform

RBC Capital analyst Srini Pajjuri initiated coverage on Arm Holdings (NASDAQ: ARM) with an Outperform rating and a price target of $140.00.

“We attribute the stock’s recent underperformance to concerns about 1) potential impact on smartphone demand from higher Memory prices, 2) related-party contribution (Softbank ~15% of sales), 3) OpEx growth, possibly related to chiplet/full-SoC initiatives.

However, core Royalty business remains solid driven by multi-year ASP tailwinds from v9/ CSS adoption and Data Center share gains.

Licensing is growing above long- term targets as AI is reinvigorating new chip designs across industries.

We are not overly concerned about RISC-V competition and believe premium valuation is justified given an unparalleled ecosystem, robust pricing power, and longer-term Edge AI opportunity.

Initiate at Outperform.”

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