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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,...

Qualcomm's stock got hit due to a license dispute with Arm Holdings. The dispute centers on Qualcomm's acquisition of Nuvia and differing royalty rates, with Qualcomm potentially facing higher fees under a new agreement. The financial impact is likely limited; Qualcomm can absorb higher royalty rates and pass costs to customers, maintaining strong earnings and margins. The stock trades at just 15x FY25 EPS estimates with AI PC and automotive opportunities outweighing the license dispute risks. QUALCOMM Incorporated  ( NASDAQ: QCOM ) slumped following news of an ongoing license dispute with  Arm Holdings plc  ( ARM ). Considering the impacts on both companies, the dispute is likely to be resolved making the biggest issue whether  Qualcomm will have to pay a higher royalty rate. My  investment thesis  remains Bullish on the stock with a huge AI opportunity ahead and a cheap valuation for a chip stock. Read the full article on Seeking Alpha.  Disclosure:...

  Updated - Oct. 18, 2023 ARM Holdings d efinitely shouldn't have a $65 price target. Shares of British chip design firm Arm Holdings ( NASDAQ: ARM )  fell nearly 2%  on Wednesday even as investment firm KeyBanc Capital Markets started coverage on the stock with an overweight rating. A team of analysts, led by John Vinh, said they believe that Arm, which was  spun out of SoftBank ( OTCPK:SFTBY ) earlier this year, will "increasingly benefit" from certain design trends in the semiconductor space, including rising chip complexity, due to compensating for the end of Moore's Law. "ARM stands to benefit as computing requirements across mobile, data center, auto, and IoT become increasingly more demanding and complex; this will only increase the industry's reliance on Arm IP, ultimately resulting in royalty rate expansion and market share gains," the analysts wrote. In addition to starting with an overweight rating, the analysts put a $65 price target on Arm, ...