ARM Stock Forecast & Price Target

ARM Holdings is well positioned by its dominant architecture footprint in smartphones and its expanding share in data center, where royalty revenue rose 11% year over year to $671 million and cloud AI/data center royalties more than doubled. Licensing is also accelerating, with revenue up 29% to $819 million and annualized contract value up 22%, while more than $2 billion of AGI CPU demand across fiscal 2027 and 2028 signals a meaningful new growth engine. Even though supply constraints are limiting near-term upside, the combination of 20%+ royalty growth, CSS adoption, hyperscaler share gains, and the launch of its own CPU products supports a strong fundamental outlook.

ARM Holdings is challenged by several fundamental headwinds that can cap the durability of its royalty growth despite its dominant smartphone CPU position. Slower adoption of ARMv9 and CSS threatens the step-up in royalty rates, while roughly 20% of sales tied to Arm China face licensing and export-control risk, and emerging RISC-V adoption could gradually erode share. Even with 1QF27 revenue guided to $1.26B at the midpoint and royalties and licensing both expected to rise about 20% Y/Y, 3nm wafer capacity constraints, elevated gross-margin pressure, and the prospect of SoftBank’s ~90% ownership creating overhang keep the outlook negative.