ARM Holdings (ARM): Embracing Higher Royalties and Data Center Growth

Artisan Partners, an investment management company, released its “Artisan Developing World Fund” second quarter 2025 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund (Investor Class) returned 14.40% compared to 11.99% for the MSCI Emerging Markets Index. The Artisan Developing World Fund has returned 192.04% cumulatively, since June 30, 2015, compared to 60.03% for the index. Equities rose in the quarter despite uncertainty around US trade initiatives, strife in longer-dated bond markets, shifts in global currency preferences, and flash points in geopolitical conditions. US markets outperformed international markets in local currency terms for the same period. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second quarter 2025 investor letter, Artisan Developing World Fund highlighted stocks such as Arm Holdings plc (NASDAQ:ARM). Arm Holdings plc (NASDAQ:ARM) develops and licenses central processing unit products and related technologies for semiconductor companies. The one-month return of Arm Holdings plc (NASDAQ:ARM) was 5.28%, and its shares lost 20.74% of their value over the last 52 weeks. On July 8, 2025, Arm Holdings plc (NASDAQ:ARM) stock closed at $147.79 per share, with a market capitalization of $156.21 billion.

Artisan Developing World Fund stated the following regarding Arm Holdings plc (NASDAQ:ARM) in its second quarter 2025 investor letter:

“Top contributors to performance for the quarter included MercadoLibre, CrowdStrike, Nu Holdings (Nubank), Sea, and British semiconductor and software design company Arm Holdings plc (NASDAQ:ARM). ARM benefited from the continued shift toward higher royalty contracts and growing excitement around its data center positioning including the long-term potential of a custom ARM chip produced by a Softbank consortium of companies.”

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A leading semiconductor chip on a computer robot arm, reflecting the technology advances of the company.

Arm Holdings plc (NASDAQ:ARM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held Arm Holdings plc (NASDAQ:ARM) at the end of the first quarter, compared to 43 in the previous quarter. While we acknowledge the risk and potential of ORCL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ORCL and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.