Raymond James Reiterates Outperform on Arm Holdings (ARM), Raises PT to $165

Arm Holdings plc (NASDAQ:ARM) is one of the AI Stocks Analysts Are Watching Closely. On July 31, Raymond James analyst Srini Pajjuri raised the price target on the stock to $165.00 (from $140.00) while maintaining an “Outperform” rating.

The rating affirmation follows Arm’s fiscal first-quarter results, which were in-line with expectations. However, fiscal second-quarter outlook was weaker than anticipated.

Royalty revenue grew 25% year-over-year backed by strong data center performance. This was, despite weakness in smartphone and IoT units. The firm also talked about royalty rate expansion.

A financial analyst looking at a monitor filled with stock market charts of U.S. listed semiconductor companies.

“Secular royalty rate expansion remains on track driven by continued ARMv9 adoption. We are also encouraged by early CSS progress (including at Samsung, MSFT, Xiaomi), which essentially doubles the royalty rate. Licensing declined slightly y/y but was better than our model while annualized contract value (ACV) grew 28%.”

Looking ahead, the firm is optimistic on the back of strong v9/CSS adoption and growing Data Center opportunity.

“Management also alluded to expanding into chiplets and full end solutions, which could significantly expand SAM, although margin impact remains unclear. We are lowering EPS partly due to higher OpEx but are raising price target from $140 to $165 on recent peer multiple expansion. Reiterate Outperform.”

Arm Holdings plc (NASDAQ:ARM) is a semiconductor and software design company that designs and manufactures semiconductor technology and other related products.

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