ARM Stock Is 'Risky, But A Highly Compelling Opportunity,' Analyst Says

• Arm guided to fiscal-year 2031 revenue of $25 billion and PF earnings per share of $9 (from $5 billion and $1.78 this year), Seaport Research Partners noted. 
• The firm has a price target of $185 on ARM shares with a ‘Buy’ rating. 
• Earlier this week, Arm said that it would be launching its first in-house chip, the Arm AGI CPU, for AI data centers, with Meta signing on as lead partner and co-developer.

Arm Holdings’ (ARM) decision to enter into the merchant chip market with the launch of its AGI CPU is a major departure from its history as a provider of intellectual property, Seaport Research Partners said.

According to a report from Barron’s, the analyst also noted that the move demonstrated a continuation of its evolution.

ARM shares were down about 1.2% in Friday’s post-market hours at the time of writing, after closing about 7% lower.

Street Consensus

Arm guided to fiscal-year 2031 revenue of $25 billion and PF earnings per share of $9 (from $5 billion and $1.78 this year), Seaport Research Partners said.

“We see this as risky, but a highly compelling opportunity for the company to greatly enhance its earnings power in a rapidly growing market,” the analyst noted.

The firm has a price target of $185 on ARM shares with a ‘Buy’ rating. Meanwhile, analysts have a 12-month average target of $164.73 on the company’s shares, representing an upside of about 14%, according to data from Koyfin.

Of the 39 analysts covering the stock, 28 have a rating of ‘Buy’ or more on the company.

Chip Launch

Earlier this week, Arm said that it would be launching its first in-house chip, the Arm AGI CPU, for AI data centers, with Meta Platforms Inc. (META) signing on as lead partner and co-developer.

The new processor would be geared toward agentic AI workloads, designed to address data needs for AI that would be able to act independently, instead of responding to queries like a regular chatbot.

The company also said that the chip would be manufactured by Taiwan Semiconductor Manufacturing Company (TSM) and would likely enter volume production later this year.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around ARM stock was in the ‘extremely bullish’ territory at the time of writing, amid ‘extremely high’ message volumes.

Shares of ARM have gained more than 25% in the past year.

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