ARM Holdings doubles its AI CPU demand pipeline to $2 billion for FY2027-28, but valuation concerns cap upside.
ARM Holdings CEO Rene Haas increased the company’s AI CPU demand pipeline to over $2 billion for fiscal years 2027 and 2028, up from $1 billion a quarter earlier. The update highlights growing traction in data center silicon, a shift from its traditional licensing model.
Shares trade at 127 times forward earnings, far above NVIDIA’s 25x multiple despite NVIDIA’s 85% revenue growth. ARM’s stock has surged 148% year-to-date, peaking at $412.55 in June before retreating to $271.43. Revenue grew 22.4% to $1.289 billion in the latest quarter, beating consensus.
Analysts set a price target of $284.95, reflecting modest upside but a hold rating due to stretched valuation. Risks include a potential adverse Qualcomm ruling, which could pressure shares toward $226.