Guggenheim Reiterates Buy on Arm Holdings, $255 PT

Guggenheim analyst John DiFucci reiterated a Buy rating and $255 price target on Arm Holdings (NASDAQ: ARM).

“ARM reported solid F1Q results across both Royalty and License (both beat consensus by 200 bps), though more importantly, management guided 2Q Royalty revenue to low-teens growth due to isolated weakness in the smartphone end-market driven by higher memory pricing.

Within Royalty, this smartphone weakness is being partially offset by higher royalty rate chips (i.e., v9) and continued strength across Cloud AI, while at the Total revenue level, the softer Royalty guide is more than offset by ARM’s F2Q License revenue acceleration guidance of 30% y/y growth.Management expects this dynamic to hold throughout FY27, effectively rejiggering the FY growth mix to be more weighted toward License, while continued strength in Cloud AI presents potential upside opportunity across tempered Royalty revenue guidance.

Importantly, management disclosed that the newly launched AGI CPU (see our 03/25 note “ARM Everywhere Recap: New Frontiers”) is trending positively, and noted that manufacturing capacity has been secured to support the initial $1B opportunity (ARM is already delivering initial product), and is showing progress toward acquiring additional supply for the next $1B of demand.

Profitability was equally constructive, with operating margin of 41% coming in ahead of consensus, while FCF of $665M (52% margin) was meaningfully ahead of the Street.

We continue to view ARM as one of three or four companies in our coverage universe (MSFT, ORCL, ARM, and perhaps CRWD) that are seeing clear-cut benefits right now from the AI paradigm shift and resulting infrastructure build-out.

We reiterate our Buy rating and $255 PT.”

This research note is reproduced verbatim from the issuing firm. Price Target never edits, paraphrases or alters analysts’ words — we only republish them in one place.