Arm Shares Soar on AI Demand Holdings, a UK-based chip designer, has seen its stock market value almost double in less than a week as investors bet on the artificial intelligence (AI) boom. The company, which is backed by SoftBank, reported financial results last Wednesday that showed demand for AI-related technology is boosting its sales.
Arm Shares Soar on AI Demand is the world’s largest supplier of design elements for the processing chips used in smartphones, laptops, data centers, and other devices. Its technology is not directly used in the AI work, but companies like Nvidia are choosing it for central processing units that complement their AI-specific chips.
Arm’s shares opened up 58% on the Nasdaq in the US on Thursday, reaching $122 and valuing the business at about $120 billion. That is more than double the $51 a share offered when the company floated in New York last September, snubbing the UK.
Rene Haas, Arm’s chief executive, said the company was benefiting from the “profound opportunity” brought by the demand from tech firms to release products and apps underpinned by AI. He also said Arm was working on new laptops and smartphones that can handle chatbots and other AI features.
Arm’s revenue rose 14% year on year to $824 million in the final calendar quarter, beating analyst expectations. The company also raised its full-year revenue and profit guidance, citing the recovery in sales of smartphones and the growth of AI applications.
Analysts said the market was starting to appreciate Arm’s business model and how it aligns with some of the bigger chip design trends over the next few years. They also said Arm was riding on the coattails of demand for Nvidia’s technology, particularly its data center systems.
Arm’s IPO lockup period, which prohibits company insiders from selling the stock, is due to expire on March 12, likely increasing the supply of shares. However, investors seem to be confident that any post-lockup sales could be well absorbed by the market, given the strong outlook for Arm.
Arm previously had a dual listing on both sides of the Atlantic before it was acquired by SoftBank for £24.6 billion in 2016. The company promised to keep its headquarters, operations, and material intellectual property in the UK, and indicated it would consider a secondary London listing “in due course”.
Arm Holdings, a UK-based chip designer, has seen its shares soar by more than 50% after raising its revenue and profit forecasts amid high demand for AI technology. The company, which is backed by SoftBank, sells design elements for processing chips used in various devices. Its technology is chosen by companies like Nvidia for central processing units that work with AI-specific chips.
Arm’s IPO lockup period, which prevents insiders from selling the stock, will end on March 12, but investors are optimistic about the company’s future.
Arm’s technology faces competition from other chip designers and manufacturers, such as Intel, AMD, Qualcomm, Xilinx, Allwinnertech, Rambus, and RISC-V. Some of these competitors offer similar or alternative solutions for the same or different markets, while others have different business models or design philosophies. Arm’s technology has some advantages and disadvantages compared to its competitors, depending on the specific use case and scenario.
Arm Holdings is a British semiconductor and software design company that specializes in Arm architecture, a family of instruction sets for processors. The company was founded in 1990 as a joint venture between Acorn Computers, Apple, and VLSI Technology. Arm’s main business is to license its designs and intellectual property to other companies that produce chips based on Arm technology. Arm’s processors are widely used in various devices, such as smartphones, laptops, data centers, and IoT devices
SoftBank is a Japanese conglomerate that owns Arm Holdings, a British chip designer. SoftBank acquired Arm in 2016 for £24.3 billion, making it one of the largest deals in the semiconductor industry. SoftBank’s vision was to leverage Arm’s technology for the Internet of Things (IoT) and artificial intelligence (AI) markets. However, in 2020, SoftBank agreed to sell Arm to Nvidia, a US-based GPU maker, for $40 billion, pending regulatory approval.