Technology
Monday, February 12th, 2024 8:14 pm EDT
Key Points
- Arm shares surged by more than 24% on Monday, building on the momentum from the previous week’s rally driven by the chipmaker’s better-than-expected third-quarter earnings and its strong position in the artificial intelligence (AI) sector.
- Since reporting its quarterly financials on February 8, Arm’s stock has climbed by over 90%, and since its initial public offering in September, it has soared by 142%, now reaching a valuation of approximately $148 billion.
- Last week, Arm announced its ability to potentially double charges for its latest instruction set, which contributes 15% to the company’s royalties, indicating potential margin expansion and increased revenue from new chip offerings. Additionally, Arm revealed its expansion into new markets such as cloud servers and automotive sectors, driven by the growing demand for AI technology. Despite having a higher earnings multiple compared to industry peers like Nvidia or AMD, Arm’s strong royalty revenue and optimistic growth forecast have positioned it as the latest favorite among investors focused on AI. However, the true value of Arm may become more evident next month when a 180-day lockup period expires, as SoftBank still holds a 90% stake in the company, which has surged by over $61 billion since the recent earnings report, now valuing its stake in Arm at upwards of $131 billion.
Arm shares experienced a significant surge of over 24% on Monday, building upon the momentum from the previous week following the chipmaker’s impressive third-quarter earnings report and its promising position in the artificial intelligence (AI) sector. Since the release of its quarterly financials on February 8, Arm’s stock has soared by more than 90%, with no explicit reason driving Monday’s spike. Since its initial public offering in September, the stock has skyrocketed by 142%, now reaching a valuation of approximately $148 billion. Last week’s earnings report highlighted Arm’s ability to potentially double its charges for its latest instruction set, which constitutes 15% of its royalties, indicating a potential expansion of margins and increased revenue from new chip offerings. Additionally, Arm announced its penetration into emerging markets such as cloud servers and automotive sectors, driven by the growing demand for AI technology. Despite boasting a higher earnings multiple compared to industry peers like Nvidia and AMD, Arm’s positive growth outlook and robust royalty revenues have positioned it as the latest favorite among AI-focused investors. However, the true value of Arm may become more evident next month when a 180-day lockup period expires. With SoftBank still holding a 90% stake in the company, its investment has surged by over $61 billion since the recent earnings report, now valuing its stake in Arm at upwards of $131 billion.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/02/12/arm-stock-up-25percent-extending-rally-to-second-week.html
