ARM Holdings PLC ADR (ARM) AI Stock Analysis

• Market Cap: $135.13B
• Dividend Yield: N/A
• Average Volume (3M): 7.01M
• Price to Earnings (P/E): 169.1
• Beta (1Y): 2.98
• Revenue Growth: 24.81%
• EPS Growth: 27.33%
• Country: US
• Employees: 8,330
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): 0.43
• Shares Outstanding: 1,061,000,000
• 10 Day Avg. Volume: 4,598,494
• 30 Day Avg. Volume: 7,007,403
• PEG Ratio: 0.94
• Price to Book (P/B): 16.40
• Price to Sales (P/S): 27.98
• P/FCF Ratio: 629.94
• Enterprise Value/Market Cap: 0.97
• Enterprise Value/Revenue: 28.13
• Enterprise Value/Gross Profit: 29.48
• Enterprise Value/Ebitda: 125.52
• 1Y Price Target: $159.50
• Price Target Upside: 27.01% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 22
• EPS Forecast (FY): 1.75
• Revenue Forecast (FY): $4.90B

• Rating: 71 Outperform
• Price Target: $137.00 ▲(9.09% Upside)
• Action: Reiterated Date: 02/07/26
• Date: Action: Reiterated 02/07/26

The score is driven primarily by strong underlying financial quality (very high margins and low leverage) and a constructive earnings outlook with clear momentum in data center and licensing/ACV. These positives are tempered by an expensive valuation, mixed technicals (below longer-term moving averages with negative MACD), and recent softness/volatility in free cash flow.

Positive Factors

High gross margins & profitability

Arm's extremely high gross margins (~95% TTM) and healthy operating/net margins reflect a highly scalable IP-licensing model with low incremental cost. This structural profitability supports reinvestment in R&D, funds strategic initiatives, and underpins durable cash generation absent heavy manufacturing capex.

Recurring licensing/royalty model & ecosystem scale

Growing ACV and sizable, recurring royalties create durable revenue visibility: long-duration licensing agreements and a broad developer/partner ecosystem convert design wins into multi-year royalties. Explosive data-center adoption provides a structural shift toward higher-value, long-duration royalty streams.

Conservative balance sheet and solid cash flow

Low leverage and positive operating/free cash flow give Arm financial flexibility to fund aggressive R&D and strategic initiatives without heavy borrowing. A strong balance sheet reduces refinancing risk in cycles and supports sustained investments that are critical to long-term IP leadership.

Negative Factors

Rising operating expenses and R&D investment

Aggressive year-over-year OpEx and R&D spending (≈+37% YoY) pressures margins unless offset by sustained, higher-margin revenue growth. If incremental investments don't translate into commercial adoption quickly, persistent OpEx growth could weigh on long-term operating leverage and returns.

Royalty growth variability and license concentration

Royalties depend on customer chip shipments and can swing with end-market cycles; near-term deceleration to low-teens shows sensitivity. Large single-party license contributions increase lumpiness and make revenue visibility vulnerable to timing of a few large deals or partner-specific decisions.

Weakening free cash flow growth & conversion

Declining FCF growth and sub-100% conversion highlight variability in cash generation versus accounting earnings. Persistent FCF erosion reduces the margin for higher R&D/OpEx and limits capacity for buybacks or discretionary returns unless revenue and royalty conversion stabilize.

ARM Holdings PLC ADR Business Overview & Revenue Model

Company Description

Arm 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 Money

ARM generates revenue primarily through licensing its technology and architecture to semiconductor manufacturers and other technology companies. The company earns fees from licensing agreements, which allow customers to design and manufacture chips based on ARM's architecture. Additionally, ARM receives royalties on the chips sold that incorporate its designs, creating a recurring revenue stream. Key partnerships with major tech firms, such as Apple, Qualcomm, and Samsung, significantly contribute to ARM's earnings, as these companies integrate ARM's technology into their products. The company's focus on innovation and expansion into emerging markets like IoT and automotive further enhances its revenue potential.

ARM Holdings PLC ADR Financial Statement Overview

Summary

High-quality profitability profile (TTM gross margin ~95%; EBIT ~18%; net ~17%) and a conservatively levered balance sheet (TTM debt-to-equity ~0.11). Offsets include volatile year-to-year profitability and weakening cash flow momentum (TTM FCF ~$0.97B, ~-15% growth; ~64% FCF-to-net-income conversion).

Income Statement

ARM shows strong profitability with extremely high gross margins (about 95% in TTM (Trailing-Twelve-Months)) and solid operating and net margins (EBIT ~18%, net ~17% in TTM). Revenue is growing (TTM ~5.9%), and earnings remain resilient versus prior years. Offsetting this, profitability has been somewhat volatile across the annual periods (notably a sharp dip in 2024), and net margin is below the prior-year annual level (2025 annual ~19.8% vs. TTM ~17.1%), suggesting some recent mix/expense pressure.

Balance Sheet

The balance sheet is conservatively levered, with low debt relative to equity (TTM debt-to-equity ~0.11) and a large equity base versus assets. Returns on equity are healthy (TTM ~11%), indicating the company is generating solid profit on shareholder capital without relying heavily on leverage. The main watch-out is that leverage has risen versus recent annual reports (debt-to-equity increasing from ~0.04–0.05 to ~0.11 in TTM), even if still low in absolute terms.

Cash Flow

Cash generation is solid in TTM (operating cash flow ~$1.52B; free cash flow ~$0.97B), and operating cash flow exceeds net income (coverage ~1.44x), which supports earnings quality. However, free cash flow conversion to net income is moderate (about 64% in TTM), and free cash flow is declining (TTM free cash flow growth ~-15%). Prior annual periods also show volatility in cash flow performance, which adds uncertainty around near-term cash consistency.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	4.67B	4.01B	3.23B	2.68B	2.70B	2.03B
Gross Profit	4.46B	3.80B	3.00B	2.48B	2.48B	1.79B
EBITDA	1.05B	902.90M	374.00M	841.20M	962.50M	876.80M
Net Income	801.00M	792.00M	306.00M	524.00M	549.00M	388.00M
Balance Sheet
Total Assets	10.18B	8.93B	7.93B	6.87B	6.51B	0.00
Cash, Cash Equivalents and Short-Term Investments	3.54B	2.83B	2.92B	2.21B	1.64B	0.00
Total Debt	858.00M	356.00M	226.00M	219.00M	261.00M	0.00
Total Liabilities	2.38B	2.09B	2.63B	2.81B	2.96B	0.00
Stockholders Equity	7.80B	6.84B	5.29B	4.05B	3.55B	0.00
Cash Flow
Free Cash Flow	970.00M	178.00M	947.00M	646.00M	383.00M	1.07B
Operating Cash Flow	1.52B	397.00M	1.09B	739.00M	458.00M	1.23B
Investing Cash Flow	-312.00M	-35.00M	-516.00M	-138.00M	-619.00M	-340.00M
Financing Cash Flow	-470.00M	-202.00M	-208.00M	-42.00M	-32.00M	-789.00M

ARM Holdings PLC ADR Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 125.58
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: 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 125.58 is above the 20-day moving average (MA) of 117.52, above the 50-day MA of 116.57, and below the 200-day MA of 138.56, indicating a neutral trend. The MACD of 3.28 indicates Negative momentum. The RSI at 60.49 is Neutral, neither overbought nor oversold. The STOCH value of 74.83 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 Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ARM	71 Outperform	$135.13B	169.13	11.27%	―	24.81%	27.33%
TXN	71 Outperform	$202.67B	41.00	29.98%	3.11%	9.90%	1.65%
AMD	67 Neutral	$326.28B	76.89	7.08%	―	31.83%	80.45%
NXPI	67 Neutral	$59.73B	29.68	21.01%	1.79%	-6.81%	-23.16%
QCOM	64 Neutral	$152.84B	29.59	21.48%	2.01%	13.66%	-45.40%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
INTC	57 Neutral	$227.07B	-544.81	-0.25%	―	-1.49%	―

ARM Holdings PLC ADR Corporate Events

Arm Holdings Posts Fiscal Q3 2026 Results for Quarter Ended December 31, 2025

Arm Holdings plc, the Cambridge-headquartered designer of power-efficient, high-performance compute architectures widely used across the global technology ecosystem, continues to position its platform as a foundational layer for AI workloads and connected devices worldwide.
On February 4, 2026, Arm reported its results for the third quarter of its fiscal year ending 2026, covering the period to December 31, 2025, via a shareholder letter published on its investor relations site and furnished to the U.S. Securities and Exchange Commission. The company is hosting an audio webcast on the same day to discuss the quarter, signaling continued emphasis on transparency and investor engagement as it builds out its role at the center of AI-focused computing infrastructure. Detailed financial and operational metrics were not included in the announcement, but the communication underlines Arm’s strategy to leverage its extensive ecosystem and developer community to meet surging demand for compute and AI capabilities.

The most recent analyst rating on (ARM) stock is a Buy with a $115.00 price target. To see the full list of analyst forecasts on ARM Holdings PLC ADR stock, see the ARM Stock Forecast page.

Arm Holdings Files Q3 FY2025 Form 6-K With Updated Financials and Risk Disclosures

Arm Holdings plc has filed a Form 6-K with the U.S. Securities and Exchange Commission reporting its unaudited financial statements and management’s discussion and analysis for the three- and nine-month periods ended December 31, 2025, thereby providing investors with updated insight into its recent operational and financial performance. The filing, which will be incorporated by reference into certain of Arm’s existing registration statements, underscores the company’s continuing obligations as a foreign private issuer in the U.S. market and highlights the broad range of risk factors and industry dependencies that could materially affect its results, including its exposure to semiconductor demand cycles, reliance on key customers and partners, intellectual property protection challenges, and macroeconomic and geopolitical uncertainties that are particularly relevant for stakeholders monitoring the company’s growth trajectory and risk profile.

The most recent analyst rating on (ARM) stock is a Buy with a $115.00 price target. To see the full list of analyst forecasts on ARM Holdings PLC ADR stock, see the ARM Stock Forecast page.