Guggenheim Raises Arm Holdings Price Target to $255
Guggenheim analyst John DiFucci raised the price target on Arm Holdings (NASDAQ: ARM) to $255.00 (from $240.00) while maintaining a Buy rating.
“ARM reported strong F4Q26 results – again – and painted a picture of the future that is even stronger.
Revenue exceeded consensus by 1% and grew 20% y/y, with License 6% above consensus and growing 29% y/y, and Royalties 4% below and growing 11%.
EPS was a penny better than the Street, though FCF was below.
Guidance for 1Q27 was above the Street on both the top (strong datacenter growth partially offset by sluggish smartphone demand) and bottom lines.
Interestingly, infrastructure sales doubled for the second consecutive quarter, as Arm is at the center of the unprecedented compute demand driven by the AI infrastructure buildout.
Management noted that demand for its recently announced AGI CPU products (to start shipping in F4Q27) is twice the $1B they anticipated just two months ago at Arm Everywhere, though we’re maintaining our $1B estimate per prudent guidance given hardware shortages, etc.
Of course, there’s risk in this foray, but it is an adjacent market that we believe Arm is well-positioned for.
While shares are down following the print, they did close up nearly 14% in today’s trading session (vs. the SPY +1.46%).
ARM reiterated that it’s recently launched CPU business is on track towards $15B in revenue in FY31, and while it may still be early, the company provided compelling statistics around performance (2x the performance per rack vs. x86) and early anecdotes from customers that demand is tangible for its CPU product.
Again, we believe three companies in our coverage universe will see clear benefits from AI: ORCL, MSFT, and ARM.
There will likely be others too, but these seem obvious. We believe this will become increasingly apparent over time and will continue to be reflected in the shares of ARM.
We remain Buy rated and raise our Price Target to $255 from $240.”
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