Harlan Sur, an analyst from J.P. Morgan, maintained the Buy rating on ARM Holdings PLC ADR (ARM – Research Report). The associated price target was raised to $175.00.
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Harlan Sur has given his Buy rating due to a combination of factors that highlight ARM Holdings PLC’s robust performance and strategic positioning in the market. ARM showcased strong quarterly results, surpassing expectations in revenue, margins, and earnings per share, driven by a rise in licensing from advanced core technologies and seasonal improvements in royalty revenues from mobile, IoT, and cloud sectors. This momentum is underpinned by the growing adoption of ARM’s high-performance compute IP and other innovative solutions, such as their Ethos NPU and CSS systems, which are essential in meeting the increasing demand for enhanced compute capabilities and power efficiency in various applications.
ARM’s strategic focus on capturing market share in high-growth areas like AI, automotive, and data center compute aligns with the analyst’s long-term positive outlook. The company’s potential for significant revenue and earnings growth over the coming years, supported by a shift towards higher-value solutions and increasing market penetration, justifies the Buy rating. Additionally, the potential for ARM to significantly increase its royalty revenue mix through innovative architecture strategies like CSS is anticipated to elevate the overall royalty rates, further supporting the company’s growth trajectory.
Based on the recent corporate insider activity of 10 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of ARM in relation to earlier this year.