Arm Holdings (NasdaqGS:ARM): A Fresh Look at Valuation Following Qualcomm Deal and Legal Resolution

Arm Holdings (NasdaqGS:ARM) grabbed investor attention after Qualcomm agreed to use Arm’s latest architecture in new PC and smartphone chips. In the same week, a court ruling ended a lengthy legal dispute in Qualcomm’s favor.

See our latest analysis for Arm Holdings.

Arm’s share price showed notable momentum after the Qualcomm deal was confirmed, surging over 6% in early trading before settling near $152. While the one-year total shareholder return sits just above 0%, the stock’s quick rebound from its recent pullback suggests investors are focused on Arm’s renewed partnerships and growth potential, even as legal risks linger. Short- and long-term performance both reflect a business finding its footing as demand for cutting-edge architecture in AI and mobile computing grows.

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With shares now trading near their price target and the business showing signs of renewed momentum, investors are left to wonder if Arm is undervalued at these levels, or if the market is already pricing in the company’s next wave of growth.

Most Popular Narrative: Fairly Valued

With Arm Holdings closing at $152.15 and the narrative fair value set at $152.59, the market appears to be aligning tightly with consensus expectations. This sets the stage for a hotly debated growth story and hints at both opportunity and caution just beneath the surface.

Arm's accelerating penetration in AI data centers, driven by hyperscalers shifting to custom silicon featuring Arm Neoverse CPUs, positions the company to capture significant royalty revenue growth, especially as their market share soars from approximately 18 percent to nearly 50 percent in a year.

Read the complete narrative.

Want to know what powers this bold price? The narrative’s calculations involve aggressive growth, expansion into lucrative markets, and ambitious profit assumptions. Discover which numbers underpin this striking valuation and see why analysts are watching Arm so closely.

Result: Fair Value of $152.59 (ABOUT RIGHT)

Have a read of the narrative in full and understand what's behind the forecasts.

However, escalating R&D costs or a slowdown in premium smartphone demand could quickly challenge the current growth story and put pressure on future margins.

Find out about the key risks to this Arm Holdings narrative.

Another View: High Price Tag by Sales Metric

Looking from a different angle, Arm shares trade at a sales ratio of 39.1x, which is significantly higher than both the US semiconductor industry average of 4.8x and the peer average of 5.7x. While the fair ratio is estimated at 40.9x, the large gap indicates heightened valuation risk. Will the market continue to reward such a premium?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Arm Holdings Narrative

If you want to dig deeper or challenge the consensus, you can assemble your own perspective on Arm Holdings in just a few minutes. Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Arm Holdings.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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