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On Thursday, Evercore ISI maintained its positive stance on ARM Holdings (LON:ARM) stock, raising the price target to $202.00 from the previous $176.00, while reiterating an Outperform rating. The firm’s analysts highlighted ARM’s impressive December quarter earnings report, which underscored the company’s advantageous position as a major beneficiary of AI technology integration at the edge. According to InvestingPro data, ARM has demonstrated remarkable momentum with a 137% return over the past year and currently commands a market capitalization of $182.1 billion.
ARM’s recent earnings were particularly strong due to a 23% year-over-year increase in royalties, with significant contributions from handset technologies and the Internet of Things (IoT) sector. The company’s impressive performance is reflected in its robust 24.56% revenue growth and exceptional gross profit margin of 95.98%, as reported by InvestingPro. Additionally, the company has revised its FY25 royalty growth forecast upward, from mid-teens to high teens, reflecting confidence in its future revenue streams.
For the March quarter, ARM’s revenue outlook is slightly above the Street’s expectations by 30 basis points. However, the company plans to ramp up its research and development spending to capitalize on emerging AI opportunities. This aggressive investment in R&D is seen as a strategic move to foster long-term growth, despite the possibility of limited operating leverage in the short term.
The management team at ARM has indicated a strong commitment to investing in R&D, aiming to lead in the AI at the edge market segment. This approach is expected to solidify ARM’s competitive edge and drive future growth, as noted by the analysts at Evercore ISI.
Concluding their remarks, the analysts from Evercore ISI expressed their conviction in ARM’s strategic execution and its exceptional positioning to benefit from AI advancements at the edge. The reiterated Outperform rating and the increased price target reflect the firm’s optimism about ARM’s prospects in this rapidly evolving technological landscape.
In other recent news, Arm Holdings (NASDAQ:ARM) has been the subject of several analyst updates. JPMorgan raised its stock target for the company to $175, citing expectations of a revenue compound annual growth rate (CAGR) of over 20% and an EPS CAGR of over 40% in the coming years, driven by increased intellectual property content, market share gains, and deeper market penetration. Meanwhile, Bernstein maintained an Underperform rating on Arm Holdings ’ stock, despite the company reporting record third-quarter fiscal year 2025 revenues of $983 million and robust licensing deals.
Barclays (LON:BARC) also maintained an Overweight rating on Arm Holdings, acknowledging improved financial year figures and strong performance in Data Center, Networking, and Internet of Things sectors. However, the firm noted concerns regarding the stagnation of v9 mix. Citi raised its stock target for Arm to $200, emphasizing the momentum building in various segments of Arm’s business, particularly those revolving around artificial intelligence.
Lastly, Goldman Sachs increased its price target for Arm Holdings to $174, highlighting the company’s solid financial performance in the third fiscal quarter. The firm’s analysts expect robust growth in Licensing revenues and a sustained increase in royalty rates, contributing to significant double-digit earnings growth for Arm Holdings by the fiscal year 2026. These developments underscore the recent attention Arm Holdings has been receiving from analysts.
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