Why Arm Holdings (ARM) Is Up 9.3% After Securing Key Qualcomm Deal Despite Legal Headwinds

• Qualcomm recently announced it will use Arm Holdings' latest v9 architecture in its new PC and smartphone chips, even as a U.S. court ruled against Arm in an ongoing licensing dispute with Qualcomm.
• This collaboration comes as Arm Holdings also unveiled its advanced Lumex AI-powered compute platform, reinforcing its influence in enabling next-generation AI and device innovation despite outstanding legal challenges.
• We'll examine how the Qualcomm agreement highlights Arm's resilience and potential to advance its investment narrative through commercial partnerships.

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Arm Holdings Investment Narrative Recap

For those considering Arm Holdings stock, the core belief centers on the company's ability to drive royalty growth beyond premium smartphones into AI, automotive, and data center markets by monetizing its newest platforms. The latest Qualcomm partnership using Arm's v9 architecture reinforces Arm's commercial position with key clients, but the ongoing legal disputes with Qualcomm introduce headline risk. The court ruling is an ongoing risk but does not materially alter the near-term catalysts tied to expanding next-generation platform adoption.

Among recent company announcements, Arm’s introduction of the Lumex AI-powered compute platform closely aligns with its ambition to raise per-chip royalties by bringing advanced AI capabilities to flagship devices. This news connects to Arm’s broader investment thesis, highlighting the company's push into new, higher-value product segments that could support both top-line growth and improved profitability even as operating expenses climb.

Yet, despite these opportunities, investors should also be aware that mounting legal pressures in key markets could still disrupt future licensing deals if...

Read the full narrative on Arm Holdings (it's free!)

Arm Holdings' outlook anticipates $7.4 billion in revenue and $2.3 billion in earnings by 2028. This is based on a 21.5% annual revenue growth rate and represents an increase in earnings of $1.6 billion from current earnings of $699.0 million.

Uncover how Arm Holdings' forecasts yield a $152.59 fair value, in line with its current price.

Exploring Other Perspectives

Compared to the consensus, the most optimistic analysts before this news saw Arm’s annual revenues growing to US$8.6 billion and earnings tripling by 2028, betting big on explosive AI uptake and data center wins. However, concerns were higher too with the risk that major customers might turn to open chip architectures like RISC-V, causing Arm’s royalty stream to shrink much more than expected. These differences highlight just how much opinions can vary, and why it’s worth exploring several viewpoints before making a decision.

Explore 22 other fair value estimates on Arm Holdings - why the stock might be worth as much as 38% more than the current price!

Build Your Own Arm Holdings Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Arm Holdings research is our analysis highlighting 2 key rewards that could impact your investment decision.
• Our free Arm Holdings research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Arm Holdings' overall financial health at a glance.

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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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