Mizuho maintains ARM stock Outperform rating with $160 target

On Thursday, Mizuho (NYSE:MFG) Securities sustained an optimistic stance on Arm Holdings (NASDAQ:ARM), maintaining an Outperform rating and a $160.00 price target. This affirmation followed investor meetings with ARM’s Vice President of Investor Relations, Jeff Kvaal. According to InvestingPro data, ARM has demonstrated strong financial performance with impressive revenue growth of 23.94% over the last twelve months and an industry-leading gross margin of 96.98%. However, current analysis suggests the stock is trading above its Fair Value. Mizuho analysts project a steady growth trajectory for ARM, anticipating a 7-10% increase in licensing and a 20% compound annual growth rate (CAGR) in royalties over the next two to three years, with the view that the V10 could extend into the fiscal years 2027-28.

ARM is expected to gain ground in the server CPU market, leveraging products like Graviton, Axion, Cobalt, and Grace, aiming for a 50% market share, a significant rise from 15% in 2024. The company is also making strides in the PC segment, with its ARM-PC share estimated at around 14% in the first quarter of 2025, up from 11% in the fourth quarter of 2024. With a market capitalization of $137.89 billion and a solid financial health score rated as "GOOD" by InvestingPro, ARM appears well-positioned to execute its growth strategy. Subscribers can access 12 additional ProTips and comprehensive financial metrics in the Pro Research Report. This growth is driven by partnerships with Qualcomm (NASDAQ:QCOM) and Apple (NASDAQ:AAPL), as well as innovations such as the GB10 and DGX Spark.

The mobile sector remains crucial for ARM, with the transition to the v9 architecture and the launch of Xiaomi (OTC:XIACF)’s XRING 01 System on Chip (SoC) on its flagship 15S PRO model. Looking ahead, ARM’s Stargate project, set to launch in the second half of 2026, is poised to be a significant opportunity for the company, potentially incorporating a custom ARM Accelerator to substantially expand its total addressable market (TAM).

Mizuho’s analysts are confident in ARM’s positioning, especially with the ongoing expansion of cloud server solutions (CSS) data centers and advancements in artificial intelligence (AI). The maintained price target of $160 reflects a forward-looking PEG ratio of 1.5x for the fiscal year 2027 estimates, indicating the analysts’ continued positive outlook for ARM’s financial performance. InvestingPro data reveals the company operates with moderate debt levels and maintains strong liquidity, with current assets exceeding short-term obligations by a factor of 5.2x. For deeper insights into ARM’s valuation and growth prospects, including detailed financial analysis and peer comparisons, investors can access the comprehensive Pro Research Report.

In other recent news, Arm Holdings reported record-breaking fourth-quarter results, with revenues exceeding $1 billion for the first time. The company achieved $1.241 billion in revenue and earnings per share of $0.55, surpassing Wall Street’s expectations. Arm’s annual revenue for fiscal year 2025 crossed the $4 billion mark, with notable growth in smartphone-related revenues. Despite these strong results, several analyst firms have adjusted their price targets for Arm Holdings. TD Cowen reduced its target to $155, citing a conservative outlook and uncertainties around tariffs, while maintaining a Buy rating. Guggenheim also lowered its target to $147, keeping a Buy rating, and noted mixed financial performance with strong royalty revenue offsetting a dip in licensing revenue. Rosenblatt Securities adjusted its target to $180, maintaining a Buy rating and highlighting Arm’s record revenue in both Licensing and Royalties. KeyBanc Capital Markets cut its target to $175, retaining an Overweight rating, and pointed to strong mobile division growth as a positive factor. Despite the revised targets, analysts express confidence in Arm Holdings’ long-term prospects.

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