ARM Stock Forecast & Price Target

ARM Holdings is supported by a durable royalty engine built on its architecture’s dominant mobile footprint and expanding penetration in data center, automotive, and other battery-powered devices, where royalty revenue rose 11% y/y to $671M and full-year royalty revenue reached $2.61B (+21% y/y). Its licensing business is also accelerating, with licensing revenue up 29% y/y to $819M, annualized contract value up 22%, and management seeing more than $2B of AGI CPU demand across FY27/FY28, which suggests a larger addressable market as agentic AI drives higher CPU requirements. Even with wafer and memory supply constraints limiting near-term upside, the company delivered FY26 revenue of $4.92B (+23% y/y), non-GAAP EPS of $1.77, and a ~43% non-GAAP operating margin, while management still expects both royalties and licensing to grow about 20% y/y, supporting a constructive long-term fundamental outlook.

ARM Holdings is exposed to a valuation and fundamentals mismatch because its business still depends heavily on royalty growth in end markets where unit growth is slowing, while management’s confidence that ASP tailwinds from v9/CSS can offset weaker smartphone and IoT demand may prove optimistic if adoption normalizes. Although C1Q26 revenue of $1.49B rose 20% QoQ and ACV reached $1.66B (+22% Y/Y), royalty revenue fell 9% QoQ to $671MM and RPO declined 7% Y/Y to $2.07B, suggesting near-term monetization remains uneven despite stronger licensing demand. The outlook is further pressured by concentration and regulatory risk, since Arm China represents about 20% of sales and faces restrictions on advanced licenses, while the planned launch of Arm’s own CPU products in 2026 could complicate partner relationships and add execution risk on top of the existing royalty model.