Raymond James Upgrades Arm Holdings to Outperform

Raymond James analyst Simon Leopold upgraded Arm Holdings (NASDAQ: ARM) from Market Perform to Outperform with a price target of $166.00.

“We upgrade Arm to Outperform following the company’s announced business model shift to include a fabless semiconductor element.

In our assumption of coverage, we advocated for Arm to go down this path because it would yield strong operating profit, aid growth and add a new dimension to the strategy.

Although we favored the strategic shift, we were uncertain if it would align with Arm’s majority shareholder Softbank’s broader strategy.

Arm has increased its forecast calling for FY28 earnings of $3 and FY31 reaching $9 a share. We establish a $166 target.

As expected, the biggest reveal was the announcement of Arm’s first internally produced chip, the AGI CPU.

The processor was co-developed with Meta, the lead partner and customer that intends to deploy it alongside its own custom MTIA accelerator.

AGI CPU is built on Neoverse V3 cores, and is supported by 96x lanes of PCIe Gen6 memory bandwidth and CXL 3 memory expansion.

The industry-leading bandwidth allows for more effective threads of execution per rack vs x86 CPUs, and Arm claims 2x the performance of x86 CPUs in its high-end reference configuration.”

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