ARM Holdings PLC ADR (ARM) AI Stock Analysis

• Market Cap: $148.84B
• Dividend Yield: N/A
• Average Volume (3M): 5.01M
• Price to Earnings (P/E): 211.5
• Beta (1Y): 3.11
• Revenue Growth: 17.84%
• EPS Growth: 63.71%
• Country: US
• Employees: 8,330
• Sector: Technology
• Sector Strength: 89
• Industry: Semiconductors
• EPS (TTM): 0.35
• Shares Outstanding: 1,059,000,000
• 10 Day Avg. Volume: 4,586,002
• 30 Day Avg. Volume: 5,006,729
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.14
• Enterprise Value/Revenue: 41.19
• Enterprise Value/Gross Profit: 43.49
• Enterprise Value/Ebitda: 206.50
• 1Y Price Target: $170.81
• Price Target Upside: 22.96% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 24

• Rating: 69 Neutral
• Price Target: $152.00 ▲(9.42% Upside)

ARM Holdings' strong financial performance and positive earnings call sentiment are significant strengths, driven by robust revenue growth in AI and data center segments. However, the high P/E ratio suggests overvaluation, and technical indicators point to bearish momentum, which tempers the overall score.

Positive Factors

Business Model Transition

ARM is working to expand its Total Addressable Market (TAM) into more value-integrated silicon by designing partial or complete solutions, which could lead to significantly higher returns.

Market Expansion

Arm expects Arm CPU share at top hyperscalers to reach nearly ~50% this year, up from ~18% last year.

Sales Growth

ARM's consistent 15-20% sales/EPS growth is projected for the next decade, with strong recurring revenue visibility over the mid-/long-term.

Negative Factors

Operational Expenses

Operating expenses may remain high over the near-term, presenting unit/opex headwinds.

Smartphone Market Challenges

ARM's largest royalty end market, smartphones, continues to see unit headwinds, with management guiding royalty sales growth at the low-end of its prior 10-15% quarter-over-quarter guide.

Strategic Uncertainties

There is a lack of clarity and detail on Arm's forward strategy, raising investor concerns.

ARM Holdings PLC ADR Business Overview & Revenue Model

Company Description

ARM Holdings PLC ADR (ARM) is a leading semiconductor and software design company specializing in the development of microprocessors, graphics processors, and related technologies. Headquartered in Cambridge, England, ARM operates in the technology sector and licenses its intellectual property to a global network of partners. The company's core products include processor designs, software tools, and system-on-chip (SoC) designs that power a wide range of electronic devices, from smartphones and tablets to automotive systems and wearables.

How the Company Makes Money

ARM Holdings makes money primarily through licensing and royalties. The company licenses its processor designs and related technologies to semiconductor companies and original equipment manufacturers (OEMs) who integrate these designs into their own products. Licensing agreements typically involve an upfront fee for access to ARM's intellectual property, followed by ongoing royalties based on the number of devices sold that incorporate ARM's technologies. This business model allows ARM to scale its revenue without the need for significant manufacturing investments. Additionally, ARM generates revenue from support, maintenance, and training services offered to its licensees. Strategic partnerships with major technology companies also contribute to ARM's earnings, as these collaborations often lead to the development of new technologies and expansion into emerging markets.

ARM Holdings PLC ADR Financial Statement Overview

Summary

ARM Holdings PLC ADR exhibits a strong financial position with impressive revenue growth, solid profitability metrics, and robust cash flow generation. The low debt levels and high equity ratio underpin financial stability, positioning the company well for future growth. Despite the strong performance, continued focus on operational efficiency could further enhance margins and profitability.

Income Statement

ARM Holdings PLC ADR shows strong income statement performance. The TTM gross profit margin is impressive at 96.55%, indicating robust cost management. The net profit margin stands at 16.96%, while the EBIT margin is 18.52%, both reflecting healthy profitability. Revenue growth is substantial, with a TTM increase of 10.19% over the previous year, driven by strong market demand. However, the EBITDA margin of 16.91% suggests some areas for improvement in operational efficiency.

Balance Sheet

The balance sheet of ARM Holdings is solid, with a low debt-to-equity ratio of 0.06 and a strong equity ratio of 74.53% in TTM, indicating financial stability and low leverage. Return on Equity (ROE) is high at 9.98%, showcasing effective use of equity to generate profits. The strong equity position reduces potential risks from financial leverage, supporting long-term growth.

Cash Flow

Cash flow analysis for ARM Holdings shows a positive outlook, with a TTM operating cash flow to net income ratio of 1.46, indicating good cash generation from operations. The free cash flow growth rate is substantial at 271.91%, reflecting effective capital expenditure management and robust cash flow generation. The free cash flow to net income ratio is 0.95, further affirming efficient cash conversion.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	4.12B	4.01B	3.23B	2.68B	2.70B	2.03B
Gross Profit	3.90B	3.80B	3.00B	2.48B	2.48B	1.79B
EBITDA	822.00M	902.90M	374.00M	841.20M	962.50M	876.80M
Net Income	699.00M	792.00M	306.00M	524.00M	549.00M	388.00M
Balance Sheet
Total Assets	9.39B	8.93B	7.93B	6.87B	6.51B	0.00
Cash, Cash Equivalents and Short-Term Investments	2.91B	2.83B	2.92B	2.21B	1.64B	0.00
Total Debt	396.00M	356.00M	226.00M	219.00M	261.00M	0.00
Total Liabilities	2.39B	2.09B	2.63B	2.81B	2.96B	0.00
Stockholders Equity	7.01B	6.84B	5.29B	4.05B	3.55B	0.00
Cash Flow
Free Cash Flow	661.00M	178.00M	947.00M	646.00M	383.00M	1.07B
Operating Cash Flow	1.02B	397.00M	1.09B	739.00M	458.00M	1.23B
Investing Cash Flow	-333.00M	-35.00M	-516.00M	-138.00M	-619.00M	-340.00M
Financing Cash Flow	-229.00M	-202.00M	-208.00M	-42.00M	-32.00M	-789.00M

ARM Holdings PLC ADR Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 138.91
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARM, the sentiment is Negative. The current price of 138.91 is below the 20-day moving average (MA) of 148.15, below the 50-day MA of 148.17, and above the 200-day MA of 136.10, indicating a neutral trend. The MACD of -3.08 indicates Positive momentum. The RSI at 40.79 is Neutral, neither overbought nor oversold. The STOCH value of 48.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ARM.

ARM Holdings PLC ADR Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
QCOM	78 Outperform	$170.58B	15.25	44.62%	2.18%	15.82%	34.20%
AMD	78 Outperform	$293.65B	102.18	4.70%	―	27.17%	108.67%
TSM	77 Outperform	$1.02T	27.19	33.29%	1.13%	38.65%	―
ADI	75 Outperform	$117.22B	64.30	5.21%	1.65%	-6.17%	-14.16%
ARM	69 Neutral	$148.84B	211.53	11.03%	―	17.84%	63.71%
INTC	52 Neutral	$104.44B	―	-19.24%	0.51%	-3.72%	-2120.70%
Sector *	50 Neutral	C$3.52B	0.36	-5.03%	7.64%	16.99%	-2.41%