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ARM Holdings PLC ADR (ARM)
NASDAQ:ARM
US Market

ARM Holdings PLC ADR (ARM) AI Stock Analysis

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ARM Holdings PLC ADR

(NASDAQ:ARM)

Rating:70Outperform
Price Target:
$172.00
▲(3.95%Upside)
ARM Holdings PLC's overall score is bolstered by strong financial performance and strategic advancements in AI and data centers. However, high valuation, overbought technical indicators, and macroeconomic uncertainties from the earnings call weigh down the score.
Positive Factors
Market Position
Arm holds a significant position in the semi ecosystem, shipping approximately 8 billion chips per quarter, with a 99% share of the mobile phone market, and a rapid expansion into IoT, automotive, consumer electronics, and infrastructure/cloud segments.
Strategic Growth
The company's diverse revenue streams, strategic partnerships, and focus on innovation position it well for future growth, as its royalty rates expand exponentially across its newest, rapidly adopted platforms.
Negative Factors
Licensing Revenue Decline
The disappointing guide is mainly driven by more than expected decline in Licensing revenues, down 28% Y/Y vs. expectation of down 15%.
Valuation Concerns
Despite Arm's strengths, its premium valuation is considered high, trading at 59 times its FY27 estimates, the highest among its peers.

ARM Holdings PLC ADR (ARM) vs. SPDR S&P 500 ETF (SPY)

ARM Holdings PLC ADR Business Overview & Revenue Model

Company DescriptionARM 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 MoneyARM 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 Key Performance Indicators (KPIs)

Any
Any
Annualized Contract Value
Annualized Contract Value
Measures the yearly value of all active contracts, highlighting the company's revenue potential and customer commitment levels.
Chart InsightsArm Holdings' Annualized Contract Value has shown consistent growth, particularly in the last year, reflecting strong demand for its AI compute solutions. The recent earnings call underscores this momentum, highlighting record revenues and a significant increase in royalty income, driven by broad market adoption. However, macroeconomic uncertainties and tariff concerns pose potential risks. Despite these challenges, Arm is optimistic about continued growth, especially with the anticipated rise in Arm-based server chips at hyperscalers and robust AI and custom silicon demand.
Data provided by:Main Street Data

ARM Holdings PLC ADR Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q4-2025)
|
% Change Since: 33.23%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
The earnings call highlighted Arm's strong financial performance with record revenues and growth in both royalty and licensing revenue. The company's strategic advancements in AI and data centers were notable. However, macroeconomic uncertainties and the decision to withhold full-year guidance due to limited visibility cast some concerns.
Q4-2025 Updates
Positive Updates
Record-Breaking Revenue and Growth
Q4 revenue exceeded $1 billion for the first time in Arm's history. For the full year, revenue topped $4 billion, with royalty revenue surpassing $2 billion, marking a first for the company.
Strong Royalty Revenue Growth
Arm delivered record royalty revenue of $607 million in Q4, an 18% year-on-year increase, driven by strong demand across all major markets. Smartphone royalties jumped 30% year-on-year.
Significant Licensing Revenue
Licensing revenue hit an all-time high of $634 million in Q4, driven by new deals and a 50% year-on-year increase. This includes a multi-year AI partnership with the Malaysian government.
AI and Data Center Expansion
Arm expects up to 50% of new server chips at hyperscalers to be Arm-based. The company is seeing strong momentum in custom silicon and AI infrastructure.
Negative Updates
Macro Uncertainty and Tariffs
Arm expressed concerns over macro uncertainty and tariffs, which could indirectly impact royalty revenues. The company has limited visibility into the indirect impact on end demand.
Lack of Full Year Guidance
Arm did not issue full year guidance for fiscal 2026 due to uncertainty in the global trade and economic picture, citing less visibility from partners.
Company Guidance
During the Arm Q4 and fiscal year 2025 conference call, the company provided guidance that highlighted record-breaking financial performance driven by strong demand for power-efficient AI compute across various sectors. Arm achieved a milestone with Q4 revenue exceeding $1 billion, contributing to a full-year revenue of over $4 billion, with royalty revenue surpassing $2 billion. The company reported a record royalty of $607 million for Q4, attributing growth to broad-based adoption across major markets such as data center, automotive, smartphones, and IoT. Arm expects up to 50% of new server chips at hyperscalers to be Arm-based in the current year. For Q1 fiscal 2026, Arm anticipates revenue between $1.0 billion and $1.1 billion, with a strong 25% to 30% projected royalty growth. The company is not providing full-year guidance due to macroeconomic uncertainties but remains confident in healthy growth, driven by visibility into customer design pipelines and rising demand for custom silicon and AI solutions.

ARM Holdings PLC ADR Financial Statement Overview

Summary
ARM Holdings PLC exhibits strong financial performance with robust revenue growth and high profitability margins. The balance sheet reflects low leverage and strong equity, contributing to financial stability. However, the decline in operating cash flow poses a potential risk.
Income Statement
90
Very Positive
ARM Holdings PLC has demonstrated strong revenue growth with an impressive increase from $3.23 billion in 2024 to $4.01 billion in 2025, marking a growth rate of approximately 23.9%. The company also maintains high gross profit margins, consistently above 90% over the years. The net profit margin has improved significantly, increasing from 9.5% in 2024 to 19.8% in 2025, indicating enhanced profitability. EBIT and EBITDA margins have also shown strong performance, contributing to the robust financial health of the company.
Balance Sheet
85
Very Positive
The company's balance sheet reflects a healthy equity position with a debt-to-equity ratio of 0.05, showing low leverage and financial risk. The return on equity (ROE) improved from 5.8% in 2024 to 11.6% in 2025, indicating effective utilization of shareholders' equity to generate earnings. The equity ratio remains strong at 76.5%, suggesting stability and the ability to sustain operations and growth.
Cash Flow
70
Positive
ARM Holdings PLC's cash flow statement shows a decline in operating cash flow from $1.09 billion in 2024 to $397 million in 2025. However, the free cash flow remains positive at $178 million, though it has decreased significantly from $947 million in the previous year. The free cash flow to net income ratio indicates the company is generating sufficient cash relative to its net income, but the decline in operating cash flow is a concern and should be monitored.
BreakdownMar 2025Mar 2024Mar 2023Mar 2022Mar 2021
Income Statement
Total Revenue4.01B3.23B2.68B2.70B2.03B
Gross Profit3.80B3.08B2.57B2.57B1.88B
EBITDA902.90M279.00M855.00M865.00M443.00M
Net Income792.00M306.00M524.00M549.00M388.00M
Balance Sheet
Total Assets8.93B7.93B6.87B6.51B0.00
Cash, Cash Equivalents and Short-Term Investments2.83B2.92B2.21B1.64B0.00
Total Debt356.00M226.00M219.00M261.00M0.00
Total Liabilities2.09B2.63B2.81B2.96B0.00
Stockholders Equity6.84B5.29B4.05B3.55B0.00
Cash Flow
Free Cash Flow178.00M947.00M646.00M383.00M1.07B
Operating Cash Flow397.00M1.09B739.00M458.00M1.23B
Investing Cash Flow-35.00M-516.00M-138.00M-619.00M-340.00M
Financing Cash Flow-202.00M-208.00M-42.00M-32.00M-789.00M

ARM Holdings PLC ADR Technical Analysis

Technical Analysis Sentiment
Positive
Last Price165.46
Price Trends
50DMA
128.78
Positive
100DMA
127.57
Positive
200DMA
135.20
Positive
Market Momentum
MACD
8.61
Negative
RSI
79.15
Negative
STOCH
92.68
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARM, the sentiment is Positive. The current price of 165.46 is above the 20-day moving average (MA) of 141.54, above the 50-day MA of 128.78, and above the 200-day MA of 135.20, indicating a bullish trend. The MACD of 8.61 indicates Negative momentum. The RSI at 79.15 is Negative, neither overbought nor oversold. The STOCH value of 92.68 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ARM.

ARM Holdings PLC ADR Risk Analysis

ARM Holdings PLC ADR disclosed 87 risk factors in its most recent earnings report. ARM Holdings PLC ADR reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
Our development of CSS, chiplets, and complete end chip solutions as well as other more integrated compute products may subject us to new or enhanced competitive, brand, technological, regulatory and financial risks. Q1, 2025

ARM Holdings PLC ADR Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
81
Outperform
$174.08B16.1442.21%2.25%16.15%32.28%
AMAMD
80
Outperform
$233.17B105.423.90%21.71%99.00%
TSTSM
77
Outperform
$962.36B29.4132.11%1.20%35.45%47.97%
ADADI
77
Outperform
$117.59B64.515.21%1.67%-6.17%-14.16%
ARARM
70
Outperform
$174.89B222.0613.05%23.94%156.53%
63
Neutral
$33.22B5.99-11.76%1.91%5.54%-19.87%
47
Neutral
$98.97B-18.66%2.20%-3.97%-562.40%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ARM
ARM Holdings PLC ADR
165.46
6.63
4.17%
AMD
Advanced Micro Devices
143.81
-13.88
-8.80%
ADI
Analog Devices
236.96
15.58
7.04%
INTC
Intel
22.69
-7.95
-25.95%
QCOM
Qualcomm
158.54
-37.19
-19.00%
TSM
TSMC
228.57
58.16
34.13%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 25, 2025