Semiconductor company Arm Holdings PLC (ARM) has launched its new Lumex chip designs, built to handle AI tasks directly on smartphones and wearables without relying on the internet. The new AI-powered chips could provide a strong catalyst for the ARM stock, as they position the company to capture growing demand for on-device AI. Year-to-date, ARM stock has gained 14%.
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Arm Bets Big on AI with Lumex Chips
Arm’s new Lumex chip designs come in four versions, ranging from low-power chips for wearables, such as smartwatches, to high-performance models for smartphones. The most powerful version is built to run advanced AI software directly on devices, without needing cloud support.
Chris Bergey, Arm’s senior VP for client business, stated that “AI is no longer a feature; it’s the foundation of next-generation mobile and consumer technology.” He also noted that users now expect devices to understand voice, predict needs, and respond instantly—without delays or network issues.
What It Means for ARM Stock
ARM stock soared from April lows amid a broader tech rally, but momentum stalled after its Q1 fiscal 2026 results on July 30. Shares dropped over 13% in one day as investors were disappointed by flat results and weak guidance that failed to support its lofty valuation.
Looking ahead, Lumex chips could give ARM stock a big boost as demand grows for AI built directly into devices. Meanwhile, Arm’s Lumex architecture shows a big shift in its strategy, from selling chip IP to offering a full AI-first platform. This isn’t just a small upgrade but a major change in chip design, aimed at meeting the rising need for fast, private, and always-on AI directly on devices.
However, success will depend on how quickly major handset makers adopt the designs and how well Arm competes with rivals like Qualcomm (QCOM) and Apple (AAPL). While the AI boom could add momentum, investors should watch adoption rates and market share gains to gauge whether this launch can truly spark the next rally.
Is ARM Stock a Buy or Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on ARM stock based on 18 Buys and five Holds assigned in the past three months. The average ARM stock price target of $171.75 per share implies an upside of 22% from current trading levels.
