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 and supported by 3 new ATA agreements, while management signaled roughly 50% y/y growth in licensing revenue ahead. The royalty stream is also becoming more durable as data center royalties doubled again, offsetting smartphone weakness and reinforcing the case that Arm-based cloud adoption at hyperscalers can drive sustained double-digit royalty growth even if mobile remains only flat. Management’s confidence in up to $2B of AGI CPU revenue across FY27-FY28, plus purchase orders extending through calendar 2027 and first commercial deliveries on track for F4Q, adds a credible new growth vector that could lift long-term revenue and earnings power.

ARM Holdings is vulnerable to multiple fundamental headwinds that could compress its valuation, including muted cloud capex, slower-than-expected adoption of ARMv9 and CSS, and stronger competition from RISC-V and other alternative instruction sets. Because ARMv9 and CSS are designed to lift royalties by roughly doubling rates versus prior generations, weak uptake would limit the company’s ability to translate its dominant 99% smartphone core presence into faster earnings growth, while Arm China, at about 20% of sales, adds regulatory and export-control risk. The outlook is further pressured by SoftBank’s ~90% ownership after the 2023 public listing, since any stake sale could create supply overhang, and by execution risk in the ramp-up of ARM AGI silicon amid a slowdown in AI capex at hyperscalers.