Shares in Arm Holdings (ARM) fired higher today as it said demand for its semiconductor chips has grown by 14 times in the last four years.
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Customer Growth
In an interview with Reuters, the company, which is headquartered in the U.K. but owned by Japan’s SoftBank (SFTBY), said that the number of customers using its chips in data centers has grown to 70,000 since 2021. It added that it has seen a 12-fold spike in startups that are using Arm chips since 2021.
That’s down to the frenzied surge in interest around generative artificial intelligence computing and the subsequent surge in data center development.
Arm Holdings stock has benefited from this trend, growing 20% in the year-to-date.
According to Reuters, the data center market has proved a difficult one for Arm to break into, but the company has more recently been aided by cloud computing giants such as Amazon (AMZN), Alphabet’s Google (GOOGL), and Microsoft (MSFT) developing home-grown Arm chips for use in their sprawling data center infrastructure.
Tariff Challenges
Chips based on the Arm architecture are known for delivering high performance with low energy consumption, which is why they power just about every mobile phone on the planet. Such performance has been adapted for chip designs for data center processors, which typically consume huge amounts of energy.
However, the company faces challenges with slower demand for its semiconductor chips in the PC and mobile markets.
It may also be facing disruption from President Trump’s ever-shifting tariff policies and the prospect of huge levies on the EU and higher levels for the U.K.
Is ARM a Good Stock to Buy Now?
On TipRanks, ARM has a Moderate Buy consensus based on 15 Buy, 4 Hold and 1 Sell ratings. Its highest price target is $187. ARM stock’s consensus price target is $153.13 implying a 3.61% upside.
