ARM Stock Forecast & Price Target

Arm Holdings has demonstrated a robust financial performance, with license revenue reaching $634 million, reflecting a significant 53% year-over-year increase and a sequential growth of 57%, largely attributed to high-value license agreements and backlog contributions. The company has experienced stronger-than-expected demand for its Custom Solutions Services (CSS), signing 13 new licenses, predominantly from mobile and infrastructure clients, which further indicates a growing market presence. Additionally, revenue from smartphone customers has risen approximately 30% year-on-year, significantly outperforming market estimates, which predict only sub-2% growth in unit sales for the industry.

Arm Holdings is guiding for a weaker-than-expected 1Q26, with projected revenues of $1.0-$1.1 billion and EPS of $0.30-$0.38, falling short of consensus estimates by $45 million and $0.08, respectively. The ongoing challenges in the mobile industry, characterized by a saturated customer base and elongating product replacement cycles, have contributed to a decline in growth prospects, particularly in the mainstream device segment. Furthermore, the company anticipates a 28% quarter-over-quarter decrease in licensing revenues and a 2% drop in royalty income, indicating continued economic and seasonal pressures on its core business.