Friday, 23 February 2024

Business News

Arm stock up 25%, extending rally to second week

Arm has a very clear AI story that will lead to growth, Futurum Group CEO says

Masayoshi Son, chairman and CEO of SoftBank Group Corp.

Kiyoshi Ota | Bloomberg | Getty Images

Arm shares rose more than 24% on Monday, extending last week’s rally as investors continue to applaud the chipmaker’s better-than-expected third-quarter earnings and its position in the artificial intelligence boom.

Arm is now up over 90% since it reported quarterly financials on Feb. 8, though without any clear catalyst for Monday’s move. The stock is up 142% since Arm’s initial public offering in September and is now worth about $148 billion.

Last week, Arm said it could charge twice as much for its latest instruction set, which accounts for 15% of the company’s royalties, suggesting it can expand its margin and make more money off new chips. It also said it was breaking into new markets, such as cloud servers and automotive, due to AI demand.

Its royalty strength combined with Arm’s optimistic growth forecast has made the company the latest AI darling among investors, despite a higher earnings multiple than Nvidia or AMD.

However, Arm’s value may become clearer next month when a 180-day lockup expires. SoftBank still owns 90% of the outstanding stock, meaning its stake in Arm has increased more than $61 billion since the company’s report last week and is now worth upward of $131 billion.

WATCH: Arm have a very clear AI story that will lead to growth

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