ARM (NASDAQ:ARM) Shares Gap Up - Still a Buy?

Key Points

• ARM shares gapped higher, opening at $318.50 versus a prior close of $306.34, as investors returned after a recent sell-off and focused on rising demand for CPUs in AI inference and data centers.
• Meta’s reported use of Arm-based technology and broader adoption of agentic AI are reinforcing expectations for long-term royalty growth from Arm’s processor designs and intellectual property.
• Analysts maintain a generally positive outlook, with a consensus “Moderate Buy” rating, though the stock’s valuation is elevated at a P/E ratio of 326.70; the company recently exceeded quarterly earnings and revenue estimates, with revenue up 22.4% year over year.

Arm Holdings PLC Sponsored ADR (NASDAQ:ARM - Get Free Report)'s stock price gapped up prior to trading on Friday. The stock had previously closed at $306.34, but opened at $318.50. ARM shares last traded at $321.7910, with a volume of 1,789,263 shares traded.

Key ARM News

Here are the key news stories impacting ARM this week:

• Positive Sentiment: Investor interest was renewed after the recent sell-off, with buyers viewing Arm as a key beneficiary of rising demand for CPUs used in AI inference and data-center workloads. Arm Climbs as Buyers Return After Sharp Pullback
• Positive Sentiment: Meta’s reported adoption of its Muse AI agent is supporting expectations for continued CPU demand. Because Arm licenses processor designs and collects royalties, broader use of Arm-based chips in AI systems could increase future revenue. Arm Stock Rises on Possible Continued Momentum From Meta’s Muse AI Launch
• Positive Sentiment: Investor commentary continues to frame ARM as an important supplier of intellectual property for agentic AI and hyperscale data centers. A bullish outlook argues that expanding server workloads could create a long-term royalty opportunity. Arm Seen as a Data-Center Royalty Opportunity

Wall Street Analysts Forecast Growth

Several research analysts have recently commented on ARM shares. UBS Group decreased their price objective on ARM from $360.00 to $320.00 and set a "buy" rating on the stock in a report on Thursday, July 30th. Sanford C. Bernstein set a $500.00 price target on ARM in a research report on Wednesday, June 17th. KeyCorp lifted their price target on ARM from $300.00 to $430.00 and gave the stock an "overweight" rating in a research note on Tuesday, July 14th. New Street Research raised ARM from a "neutral" rating to a "buy" rating and set a $260.00 price objective for the company in a research note on Thursday, July 30th. Finally, Royal Bank Of Canada dropped their price objective on ARM from $475.00 to $340.00 and set an "outperform" rating for the company in a research note on Thursday, July 30th. One research analyst has rated the stock with a Strong Buy rating, eighteen have assigned a Buy rating, seven have assigned a Hold rating and one has issued a Sell rating to the company's stock. Based on data from MarketBeat, the stock presently has an average rating of "Moderate Buy" and a consensus price target of $305.72.

ARM Stock Performance

The company's 50-day moving average price is $263.18 and its 200 day moving average price is $253.73. The stock has a market capitalization of $339.77 billion, a PE ratio of 326.70, a PEG ratio of 9.88 and a beta of 3.89.

ARM (NASDAQ:ARM - Get Free Report) last released its quarterly earnings results on Thursday, July 30th. The company reported $0.45 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $0.40 by $0.05. ARM had a net margin of 20.25% and a return on equity of 12.24%. The company had revenue of $1.29 billion during the quarter, compared to the consensus estimate of $1.26 billion. During the same period in the prior year, the firm earned $0.35 earnings per share. ARM's revenue was up 22.4% on a year-over-year basis. Analysts expect that Arm Holdings PLC Sponsored ADR will post 1.15 earnings per share for the current year.

Insider Transactions at ARM

In other ARM news, CFO Jason Child sold 10,400 shares of the firm's stock in a transaction on Monday, September 21st. The stock was sold at an average price of $300.00, for a total transaction of $3,120,000.00. Following the completion of the transaction, the chief financial officer owned 153,442 shares of the company's stock, valued at approximately $46,032,600. This trade represents a 6.35% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan.

Institutional Inflows and Outflows

Institutional investors have recently modified their holdings of the business. SBI Okasan Asset Management Co.Ltd. bought a new stake in ARM during the 4th quarter valued at about $699,000. Mitsubishi UFJ Morgan Stanley Securities Co. Ltd. purchased a new position in ARM in the fourth quarter worth about $955,000. Paragon Capital Management Inc. lifted its stake in shares of ARM by 40.4% in the first quarter. Paragon Capital Management Inc. now owns 10,609 shares of the company's stock worth $1,605,000 after buying an additional 3,055 shares in the last quarter. Capital Research Global Investors lifted its stake in shares of ARM by 5.1% in the fourth quarter. Capital Research Global Investors now owns 1,805,110 shares of the company's stock worth $197,332,000 after buying an additional 86,978 shares in the last quarter. Finally, BNP Paribas grew its holdings in shares of ARM by 36.3% during the fourth quarter. BNP Paribas now owns 13,425 shares of the company's stock valued at $1,468,000 after buying an additional 3,573 shares during the last quarter. 7.53% of the stock is currently owned by institutional investors.

About ARM

Arm Holdings plc is a semiconductor and software intellectual property company headquartered in Cambridge, England. Rather than manufacturing chips, Arm develops processor architectures and technology designs that it licenses to semiconductor companies, device manufacturers and other technology businesses for use in their own products.

Arm's portfolio includes central processing unit (CPU) architectures and processor cores, graphics processing units (GPUs), systems IP, interconnect technology, security solutions and related software and development tools.

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