Investors Are Chasing AI Chips. This Company Is Playing a Different Game Vandita Jadeja Mon, November 9, 2026 at 9:33 AM EST 5 min read ARM +4.88% QCOM +3.38% NVDA -4.59% GOOG +2.99% MSFT +1.81% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
ARM stock has dropped 34% in a month yet remains up 85% year-to-date, and our model rates it a BUY with a $221 price target.
NVIDIA's Vera, Google's Axion, AWS Graviton 5, and Microsoft's Cobalt 200 all run on Arm architecture, powering a bull case of $408.
A pending Qualcomm trial, Arm China dependence, and a 239x trailing P/E all threaten a drop to $182 in a bear scenario.
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Arm Holdings (NASDAQ:ARM) closed at $202.49, and our 24/7 Wall St. price target of $221.48 implies 9.38% upside over 12 months. The model rates the stock a buy with high confidence.
Most investors chase AI through accelerator makers. Arm takes a different approach. It licenses CPU architecture and collects a royalty on every chip its partners ship, which produces a 92.48% gross margin and a net cash balance sheet.
Now it is also selling its own data-center chip, the Arm AGI CPU. A steep drop has brought the price down to a level where our model sees room to rise.
Shares fell 10.79% over the past week, 34.26% over the past month and 27.83% over the past quarter. Even so, they remain up 84.93% year to date. Arm trades 55.27% below its $452.70 52-week high and 102.45% above its $100.02 low.
In fiscal Q1 2027, revenue came in at $1.289B (+22.4% YoY), ahead of the $1.267B consensus. GAAP EPS of $0.25 missed expectations, while non-GAAP EPS reached 45 cents. Data-center royalties more than doubled year over year.
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Arm Neoverse shipments have passed 1.5 billion cores, and the latest 500 million shipped in just nine months. Vera from NVIDIA (NASDAQ:NVDA), Google's Axion, AWS Graviton 5 and Microsoft's Cobalt 200 all run on Arm (we studied what the earliest signals of the next monster chip winner looked like in a free report here: The Next Nvidia Playbook).
The CEO also said demand for the AGI CPU has outgrown the opportunity first outlined. Among analysts, 8 rate the stock Strong Buy and 21 rate it Buy. If data-center royalties keep compounding, our bull scenario reaches $407.95.
Arm trades at 239x trailing earnings. Its GAAP operating margin fell to 7% from 11% as R&D rise to $838M. Bulls would answer that this spending funds the AGI CPU, and that the non-GAAP operating margin held near 41%.
Still, a Qualcomm (NASDAQ:QCOM) trial expected in Q4 2026, dependence on Arm China, export controls and weak smartphone sales all add risk. In our bear scenario, the stock falls to $182.04.
NVIDIA is the leading accelerator business and the clearest contrast to Arm's licensing model. It trades at 13x forward earnings, while quarterly revenue grew 105.85%.
Broadcom (NASDAQ:AVGO) designs custom silicon, which makes it a useful hybrid comparison. Its AI semiconductor revenue rose 221%, and the stock sits at 17x forward earnings.
Arm's premium reflects durable royalty streams. Our model puts heavy weight on the forward multiple, which already discounts that premium. Against these peers, the modest upside in our target looks reasonable.
Our 24/7 Wall St. price target of $221.48 carries a buy rating at 90% confidence. Data-center royalty momentum tips the scale.
I would view the stock positively if AGI CPU shipments increase on schedule and data-center royalties keep doubling. I would grow cautious if the Qualcomm ruling goes against Arm or if margins keep fell. After the recent drop, our model sees room for the price to rise.
Looking further ahead, here is where our model projects Arm could trade, assuming current growth trends and market conditions hold.
These projections assume Arm keeps executing on its current strategy. Large moves in either direction could come from AGI CPU adoption or the outcome of the Qualcomm litigation.
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