Morgan Stanley Increases Arm Holdings (ARM) PT to $194 on Transformative Chip Manufacturing Shift

Arm Holdings (NASDAQ:ARM) is one of the best performing semiconductor stocks to buy now. Morgan Stanley analyst Lee Simpson raised the firm’s price target on Arm to $194 from $150, while maintaining an Overweight rating on the shares. The adjustment came as a potential shift towards chip manufacturing by Arm is gaining investor interest, viewed by Simpson as transformative.

Arm Holdings’ revenue surged by 34% year-over-year to $1.24 billion in FQ4 2025 and marked the first time quarterly revenue surpassed the $1 billion mark. This performance was driven by record royalty revenue of $607 million, which was up 18% year-over-year. Arm’s Annualized Contract Value/ACV grew 15% to $1.37 billion, although Remaining Performance Obligations/RPO saw a 10% decrease to $2.23 billion.

Morgan Stanley Increases Arm Holdings (ARM) PT to $194 on Transformative Chip Manufacturing Shift

Iaroslav Neliubov/Shutterstock.com

The FQ4 performance was largely attributed to the growing adoption of Armv9 and Compute Subsystems/CSS platforms across various sectors, such as smartphones, cloud infrastructure, and automotive systems. Armv9-based cores now contribute over 30% of royalty revenue, up from ~25% in previous quarters.

Arm Holdings (NASDAQ:ARM) architects, develops, and licenses central processing unit products and related technologies for semiconductor companies and OEMs.

While we acknowledge the potential of ARM to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than ARM and that has 100x upside potential, check out our report about this cheapest AI stock.

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