ARM: A Licensing Juggernaut
ARM Holdings (ARM) is best known for being the architect (designing the instructions) for complex semiconductors used in modern-day electronics such as smartphones and AI infrastructure. The company then licenses the technology to tech giants such as Apple (AAPL) and NVIDIA (NVDA).
New Catalyst: ARM Builds In-House Silicon
Arm recently unveiled its first-ever in-house silicon, the Arm AGI CPU. The CPU is based off TSMC (TSM) hardware and is designed to address the CPU bottleneck in AI data centers. Meta Platforms (META) will be the lead partner for this new silicon and will use it to train its “Llama 4” platform. Because of its efficiency, core density, and memory access, ARM’s new silicon is perfectly positioned to capitalize on the red-hot agentic AI market currently taking over Wall Street.
The Longer the Base, The Higher in Space
“The longer the base, the higher in space” is a Wall Street adage that describes the relationship between a price base’s length and its potential upside. Very long bases are often powerful because they frustrate short sellers, represent institutional accumulation, and create a psychological pivot at the breakout zone. When a stock breaks out of a long base, months of bottled-up energy are released, and investors no longer have to worry about overhead selling supply, making for a smoother ride.
ARM shares are currently poised to break out of a massive 21-month base structure ahead of earnings. Based on the Fibonacci extension levels, a successful breakout should yield a conservative first price target of ~$250. (34% higher from here)
Image Source: TradingView
On today’s technical breakout, trading volume swelled to well above the 50-day average, signaling heavy demand for ARM shares.
ARM Bullish EPS Surprise History
ARM has beaten Zacks Consensus Estimates in every quarterly report since going public in the middle of 2023 (11 consecutive positive surprises. The company’s next EPS report is due May 6th and could be another catalyst for the stock.
Image Source: Zacks Investment Research
Bottom Line
By evolving from a pure-play licensor to an in-house silicon producer, ARM Holdings is directly addressing the hardware bottlenecks of the agentic AI era.
Beyond Nvidia: AI’s Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren’t likely to keep delivering the biggest profits. Little-known AI firms tackling the world’s biggest problems may be more lucrative in the coming months and years.
Apple Inc. (AAPL) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
ARM Holdings PLC Sponsored ADR (ARM) : Free Stock Analysis Report
Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
Meta Platforms, Inc. (META) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
