Technology giant Apple (NASDAQ:AAPL) and chip design company Arm Holdings have extended their longstanding collaboration. In an SEC filing related to its IPO (initial public offering), Arm highlighted that both these companies entered into a new long-term agreement that extends beyond 2040. This deal will enable Apple to continue to access the Arm architecture to develop its products.
Investors should note that Arm is the industry leader in CPUs (Central Processing Units). It architects, develops, and licenses high-performance, energy-efficient, and low-cost CPU products and related technology that leading semiconductor companies and OEMs use to build their products.
Arm’s CPU architecture is the most widely used globally, and it powers Apple devices like the iPhone, iPad, Mac, and Apple Watch. The ties between Apple and Arm are decades old. Arm was established in 1990 as a joint venture between Apple Computer, Acorn Computers, and VLSI Technology. Moreover, during its 2020 Worldwide Developers Conference, Apple revealed that it had begun transitioning from Intel (NASDAQ:INTC) processors to Apple silicon in Mac computers. These chips are based on ARM designs.
Meanwhile, Apple and several other technology companies, including Nvidia (NASDAQ:NVDA), Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG), and Advanced Micro Devices (NASDAQ:AMD), have shown interest in buying about $735 million worth of Arm stock as the company goes public. Whether Apple or these companies can invest in Arm remains to be seen. Meanwhile, let’s look at what the Street recommends for AAPL stock.
Is Apple a Buy or a Sell Right Now?
Apple stock has gained about 46.6% year-to-date. While the company has exceeded analysts’ earnings forecasts over the past two consecutive quarters, the decline in sales of the iPhone, iPad, and Mac in the third quarter and ongoing macro uncertainty keep analysts cautious in the short term.
Nonetheless, analysts expect Apple to benefit from the strength in its Services revenue and a large and growing installed base. Apple stock sports a Moderate Buy consensus rating on TipRanks, reflecting 22 Buy and eight Hold recommendations. Further, analysts’ average 12-month price target of $208.13 implies 9.72% upside potential from current levels.
