Is ARM a good stock to buy? We came across a bullish thesis on Arm Holdings plc on Long-term Investing’s Substack by Sanjiv. In this article, we will summarize the bulls’ thesis on ARM. Arm Holdings plc’s share was trading at $342.23 as of June 11th. ARM’s trailing and forward P/E were 402.62 and 156.25 respectively according to Yahoo Finance.
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Arm Holdings plc researches, develops, licenses, and markets central processing unit (CPU) intellectual property (IP), graphics processing unit IP, systems IP, compute subsystems (CSS), and associated software, tools and related services. ARM is positioned as a central beneficiary of the accelerating shift toward AI-driven computing following its “ARM Everywhere” event, where it unveiled a new AI-optimized CPU architecture designed for agentic workloads with superior power efficiency and performance.
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The company, historically dominant in mobile computing with an estimated 99% share of smartphone CPUs and over 350 billion chips shipped, is now pivoting from being primarily an intellectual property licensor to a direct participant in chip design and system-level silicon through its new ARM AGI CPU initiative. This marks a strategic expansion beyond its traditional royalty model, which has historically captured only a small fraction of value despite powering leading chip designers such as Nvidia, Qualcomm, and Apple.
ARM’s Compute Subsystems and Neoverse platform already underpin hyperscaler adoption, with over 1.25 billion cores deployed across cloud and edge workloads. The newly announced AGI CPU, built on a 3nm TSMC process with 136 Neoverse V3 cores and targeting 2x performance per watt versus x86, is designed to address surging AI infrastructure demand, where agentic AI workloads are increasing CPU core requirements by up to 4x and global data center power needs could reach 68 gigawatts by 2027.
Strategic partnerships with Meta and OpenAI reinforce ARM’s positioning in next-generation AI clusters potentially scaling to 5 gigawatts. Management expects cloud AI royalties to expand from $3 billion today to $100 billion, with total addressable market exceeding $1 trillion signaling multi-year re-rating opportunity and upside as ARM captures more value across the AI compute stack.
Previously, we covered a bullish thesis on Arm Holdings plc (ARM) by Stock Analysis Compilation in December 2024, which highlighted Arm’s royalty-led diversification across mobile, cloud, and automotive with Armv9-driven pricing power. ARM’s stock price has appreciated by approximately 159.06% since our coverage. Sanjiv shares a similar view but emphasizes ARM’s strategic pivot into AI chip design, AGI CPUs, hyperscaler partnerships, and a near $1 trillion TAM expansion opportunity.
Arm Holdings plc is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 46 hedge fund portfolios held ARM at the end of the first quarter which was 33 in the previous quarter. While we acknowledge the risk and potential of ARM 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 ARM and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
