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ARM Holdings PLC ADR (ARM)
NASDAQ:ARM
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ARM Holdings PLC ADR
(NASDAQ:ARM)
Rating:76Outperform
Price Target:
$156.00
▲(12.90% Upside)
Positive Factors
Market Expansion
Arm expects Arm CPU share at top hyperscalers to reach nearly ~50% this year, signifying significant market penetration.
Product Development
ARM Holdings is setting up multiple long-term boosters like chiplets, Project Stargate, data center CPU share gains, and edge AI, with its unique royalty model providing multiple years of recurring revenue visibility.
Sales and Earnings 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
Shares are under pressure due to slower-than-expected royalty growth in ARM's largest royalty end market, smartphones.
Strategic Clarity
There is a lack of clarity and detail on Arm's forward strategy, raising investor concerns.
ARM Holdings PLC ADR (ARM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$143.47B
Dividend YieldN/A
Average Volume (3M)4.57M
Price to Earnings (P/E)210.4
Beta (1Y)3.11
Revenue Growth17.84%
EPS Growth63.71%
CountryUS
Employees8,330
SectorTechnology
Sector Strength84
IndustrySemiconductors
Share Statistics
EPS (TTM)0.35
Shares Outstanding1,059,000,000
10 Day Avg. Volume3,383,460
30 Day Avg. Volume4,569,240
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.18
Enterprise Value/Revenue41.19
Enterprise Value/Gross Profit43.49
Enterprise Value/Ebitda206.50
Forecast
1Y Price Target
$171.75Price Target Upside24.30% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering23
ARM Holdings PLC ADR Business Overview & Revenue Model
Company DescriptionArm Holdings plc architects, develops, and licenses central processing unit products and related technologies for semiconductor companies and original equipment manufacturers rely on to develop products. It offers microprocessors, systems intellectual property (IPs), graphics processing units, physical IP and associated systems IPs, software, tools, and other related services. Its products are used in various markets, such as automotive, computing infrastructure, consumer technologies, and Internet of things. The company operates in the United States, the People's Republic of China, Taiwan, South Korea, and internationally. The company was founded in 1990 and is headquartered in Cambridge, the United Kingdom. Arm Holdings plc operates as a subsidiary of Kronos II LLC.
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
Annualized Contract Value
Measures the yearly value of all active contracts, highlighting the company's revenue potential and customer commitment levels.
Measures the yearly value of all active contracts, highlighting the company's revenue potential and customer commitment levels.
Data provided by:
Main Street Data
Main Street DataARM Holdings PLC ADR Earnings Call Summary
Earnings Call Date:Jul 30, 2025
(Q1-2026)
| % Change Since: |
Next Earnings Date:Nov 05, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong performance for Arm, with robust growth in AI workloads and data centers, record royalty revenue, and successful collaborations with major tech companies. While there were minor challenges such as a slight decline in licensing revenue and below-expected smartphone sector growth, the overall outlook remains positive with high confidence in continued growth.Q1-2026 Updates
Positive Updates
Strong Q1 Revenue Performance
Q1 revenue was $1.05 billion, marking the second highest revenue quarter for Arm. Royalty revenue reached $585 million, up 25% year-on-year.
AI and Data Center Growth
Arm Neoverse data center chips saw a 40% increase year-on-year in AI workloads, with market share expected to reach nearly 50% among hyperscalers.
Record Royalty Revenue
Royalty revenue grew to a Q1 record of $585 million, with significant growth across end markets such as smartphones, data center, automotive, and IoT.
CSS and Licensing Achievements
Three new CSS deals were closed, including two for data centers and one for PCs, more than doubling CSS licenses from the previous year.
AI Ecosystem and Developer Community
Over 22 million developers, representing more than 80% of the global base, are building on Arm, driving demand for its compute platform.
Collaborations with Major Tech Companies
Technology leaders such as NVIDIA, AWS, Google, Microsoft, Apple, Samsung, and MediaTek are integrating Arm capabilities into their products.
Positive Outlook and Guidance
Guidance for Q2 projects revenue between $1.01 billion and $1.11 billion, with expectations of continued healthy growth in the coming year.
Negative Updates
Slight Decline in Licensing Revenue
Licensing and other revenue decreased 1% year-on-year, attributed to normal fluctuations following a strong Q1 of FY '25.
Smartphone Sector Growth Below Expectations
Although Arm's growth in the smartphone sector was faster than the market, it was slightly below expected levels.
Impact of FX on Earnings
Non-GAAP EPS of $0.35 included a $0.01 FX headwind, with expectations of similar impacts in upcoming quarters.
Uncertainty in Macro and Tariff Climate
Continued uncertainty reduces near-term visibility on royalty revenue, although direct impacts are expected to be limited.
Company Guidance
During Arm's first quarter fiscal year 2026 earnings call, the company reported a strong performance with a revenue of $1.05 billion, marking it as their second highest revenue quarter. Royalty revenue increased by 25% year-on-year to $585 million, with significant growth across all end markets, including smartphones, data centers, automotive, and IoT. Licensing revenue reached $468 million, driven by continued adoption of Arm's AI platform. The company's Neoverse data center chips witnessed a 40% year-on-year increase in enterprise usage, now powering significant AI infrastructures. Arm's market share in Neo-based chips for hyperscalers is expected to reach nearly 50% this year. In terms of guidance, Arm anticipates Q2 revenue between $1.01 billion and $1.11 billion, reflecting approximately 25% year-on-year growth. They plan to accelerate R&D investments to support their technology advancements and maintain momentum in AI compute demand. Non-GAAP operating expenses for Q2 are projected to be around $655 million, with non-GAAP EPS ranging from $0.29 to $0.37.ARM Holdings PLC ADR Financial Statement Overview
Summary
ARM Holdings PLC ADR exhibits a strong overall 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.92
Very Positive
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.87
Very Positive
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.85
Very Positive
| 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
Neutral
138.17
Price Trends
146.51
Negative
136.50
Positive
135.58
Positive
Market Momentum
-2.55
Negative
47.83
Neutral
35.29
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARM, the sentiment is Neutral. The current price of 138.17 is above the 20-day moving average (MA) of 137.87, below the 50-day MA of 146.51, and above the 200-day MA of 135.58, indicating a neutral trend. The MACD of -2.55 indicates Negative momentum. The RSI at 47.83 is Neutral, neither overbought nor oversold. The STOCH value of 35.29 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $172.33B | 15.40 | 44.62% | 2.18% | 15.82% | 34.20% | |
77 Outperform | $262.56B | 87.00 | 4.70% | ― | 27.17% | 108.67% | |
76 Outperform | $143.47B | 210.40 | 11.03% | ― | 17.84% | 63.71% | |
76 Outperform | $56.82B | 26.64 | 23.11% | 1.79% | -7.53% | -21.88% | |
75 Outperform | $170.27B | 35.78 | 29.84% | 2.89% | 3.62% | -5.27% | |
61 Neutral | $35.55B | 8.88 | -11.05% | 1.87% | 8.55% | -8.14% | |
58 Neutral | $107.72B | ― | -19.24% | 0.51% | -3.72% | -2120.70% |
* Technology Sector Average
Performance Comparison
ARM
ARM Holdings PLC ADR
138.17
12.63
10.06%
AMD
Advanced Micro Devices
151.14
12.99
9.40%
INTC
Intel
24.49
5.42
28.42%
NXPI
NXP Semiconductors
226.74
0.37
0.16%
QCOM
Qualcomm
159.84
2.61
1.66%
TXN
Texas Instruments
187.93
-7.37
-3.77%
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.