ARM Stock Forecast & Price Target

ARM Holdings is attractive because its licensing engine is accelerating, with licensing and other revenue up 50% year over year to $773M, 3 new ATA agreements, and total active ATA subscriptions above 60, showing durable demand for its architecture and customer commitment. Royalty growth was softer at $670M, up 8% year over year, but the weakness was tied to a subdued smartphone market rather than structural erosion, while data center royalties doubled again on adoption at hyperscalers including GOOG Axion, AMZN Graviton, MSFT Cobalt, and NVDA Vera. The outlook is further strengthened by higher confidence in up to $2B of AGI CPU revenue across FY27-FY28, with purchase orders extending through calendar 2027, first commercial deliveries on track for F4Q, and management expecting AI-driven CPU growth to offset smartphone cyclicality.

ARM Holdings is exposed to several fundamental headwinds that could limit upside, including muted cloud capex, potential downward revisions, and slower-than-expected adoption of ARMv9 and CSS, which are meant to lift royalty rates. Its valuation already assumes meaningful multiple compression below its 3-year trough of ~40x, yet competition from RISC-V is gaining traction at customers such as QCOM and META and could erode market share over time. In addition, Arm China accounts for ~20% of sales, SoftBank owns ~90% of the company after the 2023 public offering, and any export-control tightening or stake-sale overhang could pressure both revenue stability and sentiment.