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Arm Holdings: Still Holding On To Sky High Valuation

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  • Arm Holdings' stock remains overvalued due to AI hype, despite only 5% YoY sales growth and limited AI chip market participation.
  • The company's revenue growth is constrained by volatile license revenues and slow adoption of the newer Armv9 architecture, limiting significant royalty rate increases.
  • Arm's massive margins and strong profits are overshadowed by a small revenue base and the need for substantial growth to justify current valuations.
  • The stock trades at over 63x FY26 EPS targets, with a fair value below $100.
  • Looking for a portfolio of ideas like this one? Members of Out Fox The Street get exclusive access to our subscriber-only portfolios. Learn More »
ARM Holdings plc (NASDAQ:ARM) continues to report mixed results in the AI chip race, while the company doesn't really participate as viewed by the market. The company just recorded a quarter where sales hardly grew YoY despite a big beat. My investment thesis remains ultra-Bearish on the stock, with investors still justifying nose bleed valuations due to misunderstanding of AI chip benefits.


Read the full article on Seeking Alpha. 

Disclosure: Long QCOM. Please review the disclaimer page for more details. 

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