There was good news for chip stock ARM Holdings (ARM), but it did not sit well with shareholders. A CNBC report detailed how analysts are looking for more growth out of ARM, but despite that, shares still slipped modestly down in Monday afternoon’s trading.
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The report featured a note from Loop Capital analyst Ananda Baruah, who not only kept a Buy rating in place on the stock, but also hiked the price target from $180 to $195. After an exciting earnings report from ARM Holdings, in which it beat both earnings and revenue expectations—though guidance for the next quarter proved a bit lackluster—Baruah looked for more growth to come.
Baruah noted that despite “in-line” guidance, he expects a “very bullish FY2026 narrative” when its March quarter guidance comes out in April. Basically, Baruah looks for demand in artificial intelligence chips to drive further interest in ARM’s line of “compute systems” throughout all ARM’s markets. In fact, Baruah noted, there are several major deals already in the works for March, which should improve things further.
Fear No DeepSeek
Easily one of the biggest bombshells to hit 2025 so far was the rise of China’s DeepSeek R1 artificial intelligence. While the software was found to have some issues—try asking it about Tiananmen Square sometime—it still represented a potentially major new competitor, developed for a whole lot less in time and resources than much of its competition. But ARM is not afraid of DeepSeek at all, noted CEO Rene Haas.
Haas does not believe DeepSeek developed its program on such a “shoestring budget,” and that DeepSeek turned to “distillation” to get its R1 in play. Distillation is a process by which AI models are trained by using other AI models, and that OpenAI’s ChatGPT played heavily in that distillation. But regardless, ARM worked to shake up its business model and leave it a lot less at risk to developments like DeepSeek, even if they were a problem to begin with.
Is ARM Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ARM stock based on 17 Buys, four Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 8.21% rally in its share price over the past year, the average ARM price target of $179 per share implies 11.1% upside potential.
