Track market-moving stories before they get noisy

Artificial intelligence (AI) has evolved from the chatbots that were popular during the early days of the technology's rollout, when generative AI-based chatbots and assistants, such as ChatGPT, provided a single response to the user's input.

AI has now become more capable. Chatbots can perform complex, multi-step tasks to achieve goals by collecting data, using models to break down the objective into steps, and employing external tools such as databases and search engines to provide results. These AI agents can operate autonomously or semi-autonomously to plan tasks and perform actions using software tools.

Not surprisingly, demand for agentic AI is expected to surge due to its benefits. According to a third-party estimate, the agentic AI market could clock a 40% compound annual growth rate (CAGR) over the next seven years, generating $206 billion in revenue in 2033. The agentic AI market's rapid growth has created a surge in demand for server central processing units (CPUs), which explains why Advanced Micro Devices (AMD +3.36%) and Intel (INTC +1.39%) have been enjoying phenomenal growth in their server CPU business.

Image source: Getty Images.

Agentic AI has been a tailwind for AMD and Intel
CPUs play a critical role in agentic AI, helping manage the multi-step workflow by coordinating hardware and software resources needed to perform the complex tasks. This is why the ratio of CPUs to GPUs (graphics processing units) in AI servers running agentic AI workloads is shifting from 1:4 earlier to 1:2 or even 1:1, suggesting a 2-4x jump in server CPU demand.

AMD Advanced Micro Devices$552.72+$17.98 (+3.36%)

NASDAQ · As of 4:00 PM ET 10/21/26

AMD and Intel have been winning big from this shift. AMD's data center revenue grew by 107% year over year in the second quarter of 2026. CEO Lisa Su remarked on the recent earnings call:

In server, we delivered our fifth consecutive quarter of record server CPU revenue with cloud and enterprise sales each growing more than 70% year-over-year, exceeding the outlook we provided last quarter.

Meanwhile, Intel recorded an impressive year-over-year increase of 59% in its data center and AI (DCAI) business in Q2 to $6.3 billion. The company believes that its current generation of server CPUs, codenamed Granite Rapids, will help it sustain the impressive growth of the data center business. Intel is ramping up the production of these server CPUs, and it is working with key server OEMs (original equipment manufacturers) such as Dell Technologies, Lenovo, Hewlett Packard Enterprise, and others to bring Granite Rapids to the market.

What's worth noting is that both Intel and AMD could continue to benefit from the fast-growing server CPU market in the long run. That's because AMD expects the server CPU market to clock an annual growth rate of 50% through 2030, generating $220 billion in annual revenue by the end of the decade. However, I think that the biggest winner of the agentic AI-driven server CPU market's growth won't be Intel or AMD.

Instead, British technology company Arm Holdings (ARM +2.50%) seems like the better semiconductor stock to buy for the agentic AI era.

Arm Holdings could crush Intel and AMD in server CPUs
Arm Holdings is known for providing intellectual property and instruction set architectures that semiconductor companies use to design chips for smartphones, data centers, and automotive applications. Arm is a direct competitor to AMD and Intel, as it offers reduced instruction set computing (RISC) architecture. AMD and Intel's x86 platform is based on complex instruction set computing (CISC).

ARM Arm Holdings$226.59+$5.53 (+2.50%)

NASDAQ · As of 4:00 PM ET 10/21/26

AMD and Intel's x86 architecture processes complex instructions, while Arm's architecture is known for rapidly executing parallel instructions in small batches. As a result, Arm-based server CPUs are ideal for running agentic AI tasks, especially because they deliver 30% to 60% higher energy efficiency than x86 chips. Not surprisingly, the share of Arm server CPUs has increased from just 5% in 2020 to approximately 20% currently, according to Silicon Analysts.

In fact, market research firm IDC noted earlier this year that the revenue of Arm-based server platforms hit $53 billion in the first quarter of 2026, well above x86's revenue share of $34.6 billion. Given that Arm makes money by licensing its IP to customers like Nvidia and also receives royalties on each chip designed using its architecture, it is poised to win big from the growing adoption of Arm-based server CPUs in the agentic AI era.

Moreover, the company has started making its own server CPU, primarily targeting agentic AI and inference. Arm expects more than $2 billion in revenue from sales of its server CPU over the next couple of fiscal years. Notably, the company saw a $1 billion revenue opportunity a few months ago for its latest product in fiscal 2027 and 2028, but it has doubled its estimate thanks to the addition of new customers for its agentic AI-focused server processor.

So, it is easy to see why analysts expect Arm's revenue growth to accelerate following an estimated 23% increase in the current fiscal year to $6.06 billion.

Data by YCharts

Additionally, its bottom-line growth rate is poised to improve in the future, following an estimated increase of 26% in the ongoing fiscal 2027.

Data by YCharts

However, investors should note that they will have to pay a heavy premium to buy Arm. It is trading at 235 times earnings right now, though the forward earnings multiple of 103 points to a nice improvement in the bottom line. Also, Arm's growing influence in the lucrative server CPU market justifies the valuation.

Counterpoint Research expects Arm-based CPUs to corner 90% of the custom server CPU market by 2029, overtaking x86 processors from AMD and Intel. The firm adds that Arm-based CPUs deliver 2x higher performance-per-watt compared to comparable x86 offerings. All this makes Arm stock a solid buy for investors looking to capitalize on the agentic AI market's growth, as it can outperform AMD and Intel in this space and justify its premium valuation over the long run.

On October 19, 2026, we delve into the DCF analysis for ARM Holdings PLC ARM, a company that has seen a significant price performance fluctuation recently. Over the past year, the stock has appreciated by 33.1%, but it has also experienced a notable decline of 14.4% in the last week alone. Here are some key takeaways:

DCF Earnings-based intrinsic value is $11.29 compared to the current price of $227.80, indicating a margin of safety of -1917.7%. DCF Free Cash Flow (FCF)-based intrinsic value is $43.84, reinforcing the overvaluation perspective. GF Score™ of 72/100 suggests moderate reliability of the DCF inputs, but with a predictability rank of 2/5 stars, caution is warranted. What Is ARM Worth? DCF Earnings-Based Model The DCF earnings-based model employs a two-stage approach to estimate the intrinsic value of ARM Holdings. The first stage considers a growth phase where earnings per share (EPS) is projected to grow at a rate of 0.0% for the next ten years, followed by a terminal phase with a growth rate of 4% for the subsequent ten years. Below are the key assumptions used in this model:

Parameter Value Current EPS (TTM, excl. non-recurring) $0.98 10-Year Growth Rate 0.0% 10-Year Treasury Rate 5.08% Discount Rate (ceil(Treasury) + 6%) 12% Terminal Growth Rate 4% The calculation summary for the two-stage model is as follows:

Stage Description Value Growth Stage (Years 1-10) EPS growing at 0.0%, discounted at 12% $8.14 Terminal Stage (Years 11-20) 4% terminal growth, discounted at 12% $3.15 Intrinsic Value Growth + Terminal $11.29 With the current price at $227.80, the intrinsic value of $11.29 indicates that ARM is significantly overvalued, with a margin of safety of -1917.7%. It is important to note that GuruFocus utilizes EPS excluding non-recurring items, as research indicates a stronger correlation between stock prices and earnings than with free cash flow. For further analysis, visit the ARM DCF Calculator.

What Does the Free Cash Flow DCF Say? The FCF-based intrinsic value for ARM is calculated at $43.84. This figure aligns with the earnings-based DCF model, both indicating that the stock is significantly overvalued, with a margin of safety of -419.6%. The consistency between these two valuation methods reinforces the conclusion drawn from the earnings-based model.

How Does GF Value™ Compare to the DCF Models? The GF Value™ for ARM is currently $196.51, providing a third perspective on the stock's valuation. GF Value™ is a proprietary measure from GuruFocus that takes into account historical trading multiples, past business growth, and future performance estimates. All three models—the DCF earnings, DCF FCF, and GF Value™—concur that ARM is overvalued, which adds weight to the overall valuation analysis. For more details, check out the GF Value™.

What Does ARM's GF Score™ Tell Us? The GF Score™ evaluates various aspects of a company's financial health and market performance. ARM's score of 72/100 indicates a solid standing, but the predictability rank of 2/5 stars suggests that the DCF model's reliability is limited. Below is a summary of ARM's GF Score™ metrics:

Metric Rating GF Score™ 72/100 Financial Strength 8/10 Profitability 8/10 Growth 10/10 Valuation 6/10 Momentum 0/10 With a predictability rank of 2/5 stars, it is crucial to approach the DCF model results with caution. For more information, visit the ARM stock page.

Key Assumptions and Limitations It is essential to recognize that DCF models are highly sensitive to the assumptions regarding growth and discount rates. Stocks with lower predictability ratings, such as ARM, yield less reliable DCF estimates. The terminal growth rate of 4% is a simplifying assumption that may not accurately reflect future performance.

What This Means for Investors In summary, all three valuation models—the DCF earnings, DCF FCF, and GF Value™—indicate that ARM Holdings PLC is significantly overvalued. The consensus across these models suggests caution for potential investors. Additionally, the current guru ownership signal shows that 10 gurus hold the stock, with 6 adding and 6 trimming their positions, while insiders have sold a total of $72.2M over the past year. This mixed signal from guru activity, combined with the overvaluation indicated by the models, suggests that investors should proceed with caution. For a deeper look into the DCF analysis, visit the ARM DCF Calculator.

Frequently Asked Questions What is ARM's intrinsic value based on DCF?

ARM's intrinsic value based on the DCF earnings model is $11.29, while the FCF-based intrinsic value is $43.84.

Is ARM overvalued or undervalued?

Based on the DCF and GF Value™ consensus, ARM is significantly overvalued.

How reliable is the DCF model for ARM?

The DCF model's reliability for ARM is limited, as indicated by its predictability rank of 2/5 stars.

This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].

Disclosures I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.

Arm Holdings has surged over 120% this year while building a chip empire that stretches from smartphones into AI data centers, but a brutal recent selloff and a valuation that makes even NVIDIA look cheap raise a pointed question about…

Arm Holdings (NASDAQ:ARM | ARM Price Prediction) trades at $243.15 today. The 24/7 Wall St. price target for Arm is $247.55 over the next 12 months, which means 1.81% upside. Our rating is hold, and our confidence in the model is high.

24/7 Wall St. Price Target Summary Metric Value Current Price $243.15 Price Target from 24/7 Wall St. $247.55 Upside/Downside 1.81% Recommendation HOLD Confidence Level 90% Arm started out licensing chip designs for smartphones. Today it is building its own AI data center silicon, and Wall Street has taken notice.

The stock carries 8 Strong Buy and 21 Buy ratings. At the end of June, Alphabet (NASDAQ:GOOGL) held $695 million of Arm stock, and Maverick Capital opened a new position. I think the story is real, but much of it is already in the price.

A Brutal Week Takes Some Shine Off a Huge Year Arm has dropped 19.64% over the past week and 8.17% over the past month. Even so, it is still up 122.44% year to date. Shares sit about 46% below the 52-week high of $452.70 and about 143% above the low of $100.02.

Arm’s fiscal Q1 2027 revenue came in at $1.289 billion, up 22.4% and ahead of the $1.267 billion consensus. GAAP EPS of $0.25 missed expectations. Non-GAAP EPS of 45 cents topped the high end of guidance. Management also said demand for its Arm AGI CPU “now exceeds $2 billion.”

Why Bulls See $416 Ahead Arm’s data center royalties more than doubled year over year once again, and Neoverse shipments have passed 1.5 billion cores. Vera from NVIDIA (NASDAQ:NVDA), Google’s Axion, Microsoft’s Cobalt and AWS’s Graviton all run on Arm designs.

Management has seen outside estimates for the CPU market rise from $100 billion to as much as $220 billion (we studied what the earliest signs of the last mega-winner in chips looked like and put the pattern in a free playbook here). The consensus target of $290.70 stands well above our number. If everything goes right, Arm reaches $416.44.

Valuation and Margin Pressure Are the Risks Worth Watching Arm trades at about 302x trailing earnings. GAAP operating margin fell to 7% from 11% as operating expenses rise 28%, and EPS has missed estimates in four of the last five quarters.

Other risks include the Qualcomm (NASDAQ:QCOM) trial expected in Q4 2026, Arm’s reliance on Arm China and smartphone royalty growth that is heading toward the “high teens.”

Bulls have a reasonable reply. Non-GAAP operating margin rose to about 41%, which shows the GAAP pressure mostly reflects stock-based pay and spending on future growth. In our bear case, the stock falls to $200.29.

How Arm Compares to NVIDIA and AMD NVIDIA belongs in this comparison because its Vera CPU runs on Arm designs, so the two depend on the same AI buildout. The stock trades at about 46x earnings, and Q2 revenue rose 105.85%. That much faster growth at a far lower multiple makes Arm’s valuation look stretched.

AMD (NASDAQ:AMD) competes with Arm-based chips through its x86 EPYC server processors. Its P/E of about 228x shows the market will pay a premium for AI CPU exposure, although AMD’s gross margin is much lower than Arm’s.

Company Trailing P/E Gross Margin Arm 302x 92.5% NVIDIA 46x 71.1% AMD 228x 49.5% Taken together, these peers make the 24/7 Wall St. price target look reasonable. Arm’s margins justify a premium, but there is little room for the multiple to expand from here.

Valuation Caps Arm’s Upside for Now The hold rating rests on a 24/7 Wall St. price target of $247.55, with 90% confidence. Valuation is what tips the scale.

I’d turn more constructive if AGI CPU revenue grows on schedule and GAAP earnings start beating estimates. I’d stay cautious if the Qualcomm case goes against Arm or margins keep fell. For now, the price fairly reflects a great business.

Here is where our model projects Arm could trade if current growth and market conditions hold over the longer term.

Year Price Target from 24/7 Wall St. 2026 $259.56 2027 $230.35 2028 $243.69 2029 $247.42 2030 $291.93 These projections assume Arm keeps executing on the plan in place. Big deals in the AGI CPU business could push the stock well above these levels, while a loss in the Qualcomm case could brings it below them.

Contact [email protected] for any questions or corrections.

Shares of Arm Holdings (ARM -6.80%) were falling today amid a broader sell-off in tech and chip stocks after the September Consumer Price Index (CPI) came in hotter than expected.

That was enough to send tech stocks swooning as it makes it more likely that the Fed will raise interest rates at its next meeting later this month.

Arm is especially sensitive to interest rates because most of the stock's value comes from earnings that are several years into the future, as investors are betting on strong profits from its new AGI CPU, which has yet to go on sale.

As of 3:13 p.m ET, Arm stock was down 6.7% on the news.

Image source: The Motley Fool.

What happened with the CPIThe Consumer Price Index is one of the most important data points in determining the Fed's action on interest rates, and faster-than-expected inflation is more likely to trigger a rate hike to help slow the economy down and reel in inflation.

The CPI rose 3.7% on an annual basis last month, ahead of expectations at 3.6%, while core CPI, which strips out the volatile food and energy categories, was up 2.6%, compared to expectations of 2.5% growth.

Energy prices continue to surge due to the war in Iran, up 5.2% from August, and gasoline was up 9.1%.

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What it means for ArmInflation doesn't directly impact Arm. While the company's chip designs are found in smartphones and an array of other consumer devices, the stock is down because of valuation-related adjustments. As interest rates go up, the discount rate in the discounted cash flow also goes up, and that makes earnings in the future less valuable than they were.

Investors should expect Arm stock to continue moving up and down according to interest rate expectations.

Jeremy Bowman has positions in Arm Holdings. The Motley Fool has positions in and recommends Arm Holdings. The Motley Fool has a disclosure policy.

Arm Holdings PLC Sponsored ADR (NASDAQ:ARM – Get Free Report) has earned a consensus rating of “Moderate Buy” from the twenty-seven analysts that are presently covering the firm, Marketbeat.com reports. One equities research analyst has rated the stock with a sell recommendation, seven have assigned a hold recommendation, eighteen have given a buy recommendation and one has assigned a strong buy recommendation to the company. The average twelve-month price target among brokerages that have covered the stock in the last year is $303.32.

A number of brokerages recently weighed in on ARM. Sanford C. Bernstein set a $500.00 price target on ARM in a research note on Wednesday, June 17th. Jefferies Financial Group restated a “buy” rating and set a $320.00 price objective on shares of ARM in a report on Monday, July 20th. Susquehanna upped their price objective on shares of ARM from $300.00 to $320.00 and gave the company a “positive” rating in a research note on Tuesday, July 21st. Raymond James Financial reiterated an “outperform” rating and issued a $166.00 target price on shares of ARM in a report on Tuesday, August 25th. Finally, Needham & Company LLC reissued a “buy” rating and issued a $255.00 target price on shares of ARM in a research report on Thursday, July 30th.

View Our Latest Analysis on ARM

ARM Stock Down 4.1% Shares of NASDAQ ARM opened at $255.24 on Tuesday. The stock has a market capitalization of $272.62 billion, a price-to-earnings ratio of 263.14, a PEG ratio of 7.90 and a beta of 3.78. The stock’s fifty day simple moving average is $270.44 and its 200 day simple moving average is $267.63. ARM has a 52-week low of $100.02 and a 52-week high of $452.70. ARM (NASDAQ:ARM – Get Free Report) last announced its earnings results on Thursday, July 30th. The company reported $0.45 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.40 by $0.05. ARM had a return on equity of 12.24% and a net margin of 20.25%. The company had revenue of $1.29 billion for the quarter, compared to analyst estimates of $1.26 billion. During the same period in the previous year, the firm earned $0.35 earnings per share. ARM’s revenue for the quarter was up 22.4% compared to the same quarter last year. As a group, analysts anticipate that ARM will post 1.15 earnings per share for the current year.

Insider Activity at ARM In related news, CFO Jason Child sold 10,400 shares of the firm’s stock in a transaction that occurred on Monday, September 21st. The shares were sold at an average price of $300.00, for a total value of $3,120,000.00. Following the completion of the transaction, the chief financial officer owned 153,442 shares of the company’s stock, valued at approximately $46,032,600. This trade represents a 6.35% decrease in their position. The transaction was disclosed in a document filed with the SEC, which is accessible through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan.

Institutional Trading of ARM Several large investors have recently added to or reduced their stakes in ARM. Schaper Benz & Wise Investment Counsel Inc. WI lifted its holdings in shares of ARM by 3.7% in the third quarter. Schaper Benz & Wise Investment Counsel Inc. WI now owns 38,630 shares of the company’s stock valued at $11,190,000 after purchasing an additional 1,372 shares in the last quarter. Wedmont Private Capital purchased a new position in shares of ARM during the third quarter valued at $1,322,000. Gainplan LLC purchased a new position in shares of ARM during the third quarter valued at $724,000. Zevenbergen Capital Investments LLC raised its position in ARM by 3.2% during the third quarter. Zevenbergen Capital Investments LLC now owns 62,945 shares of the company’s stock valued at $18,233,000 after buying an additional 1,980 shares during the period. Finally, Avidian Wealth Enterprises LLC raised its position in ARM by 9.7% during the third quarter. Avidian Wealth Enterprises LLC now owns 1,300 shares of the company’s stock valued at $377,000 after buying an additional 115 shares during the period. 7.53% of the stock is owned by institutional investors and hedge funds.

ARM Company Profile (Get Free Report)

Arm Holdings plc (NASDAQ: ARM) is a semiconductor and software design company that develops intellectual property used to create energy-efficient computing products. Arm does not generally manufacture chips; instead, it licenses processor architectures, CPU cores, graphics technologies and related system IP to semiconductor companies and original equipment manufacturers, which incorporate them into their own products.

The company’s offerings include the Cortex family of CPUs for mobile, consumer, automotive and embedded applications; Neoverse platforms for cloud and data-center infrastructure; Mali graphics processing units; and Ethos neural processing units designed for artificial intelligence and machine-learning workloads.

See Also Five stocks we like better than ARM Salesforce Just Got a Rare Double Upgrade—What Changed? OpenAI’s Revenue Scare Could Be a Big Opportunity for Investors China Still Dominates Rare Earths—These 3 U.S. Companies Could Benefit 3 REITs That May Win in a Higher Interest Rate Environment

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As the artificial intelligence revolution matures, investors are scrutinizing infrastructure providers. Choosing between Arm Holdings (ARM -3.27%) and Marvell Technology (MRVL +0.25%) involves weighing architectural dominance against high-speed data center connectivity leadership.

Arm provides the energy-efficient processor blueprints used in nearly every smartphone and an increasing number of cloud servers. Marvell specializes in data infrastructure silicon, helping move and store massive amounts of information. Both are critical to modern computing, but their financial profiles and market roles offer distinct paths for growth in the tech sector.

The case for ArmArm functions as the foundation of modern computing by licensing its energy-efficient processor designs to other chipmakers. This licensing and royalty model allows the company to reach vast markets, including mobile, automotive, and data centers, without the high costs of manufacturing. The company does not disclose individual customer names in its latest annual report, but its blueprints are fundamental to the global smartphone supply chain.

In its 2026 fiscal year (FY), ended March 31, revenue reached $4.9 billion, representing 22.8% growth compared to the $4.0 billion reported in the prior year. This expansion was accompanied by net income of $904.0 million, yielding a net margin of 18.4%. While this net margin is slightly lower than the 19.8% seen in FY 2025, it remains significantly higher than the 9.5% recorded in FY 2024.

Arm maintains a debt-to-equity ratio of 0.1x, which means total debt is a small fraction of shareholder equity. Its current ratio is 6.0x, indicating a strong ability to cover short-term debts with current assets. Free cash flow reached $979.0 million, though note that stock-based compensation (SBC) represented 69% of operating cash flow, which inflates reported cash generation since SBC is a non-cash expense added back in the cash flow statement.

The case for Marvell TechnologyMarvell is a dominant force among semiconductor stocks, providing the infrastructure needed for high-performance AI networking. The company focuses on high-speed connectivity and storage solutions for the data center market, which accounted for roughly 74% of revenue in FY 2026, ended Jan. 31. Customer concentration like this adds a layer of risk to the business, as two customers each account for more than 10% of total revenue.

In FY 2026, revenue reached $8.2 billion, a significant jump of nearly 42.1% from the $5.8 billion generated in FY 2025. This growth resulted in a net income of $2.7 billion, a massive improvement from the net losses reported in the previous two years. The net margin for this period reached 32.6%, showcasing the high profitability of its data center silicon portfolio.

Marvell carries a debt-to-equity ratio of 0.3x, showing a relatively conservative use of debt. The current ratio is 2.0x, which measures how well the company can meet short-term obligations using its current assets. Free cash flow for the year was $1.4 billion, but note that stock-based compensation represented roughly 33.8% of operating cash flow.

Risk profile comparisonArm faces risks from the rise of open-source architectures that could eventually challenge its proprietary designs. Furthermore, as large technology companies like Nvidia (NVDA -0.52%) and Qualcomm (QCOM -0.29%) develop more of their own custom silicon, they may seek to reduce their reliance on external blueprints. Arm also competes against Intel (INTC -2.22%) in the server market, where the transition to energy-efficient chips is still in its middle stages.

Marvell deals with extreme revenue concentration, as its ten largest customers represent roughly 82% of its total sales. This makes the company vulnerable to any design changes or spending cuts from a few major hyperscalers. Geopolitical risks also loom large, as Marvell depends on third-party manufacturing in Taiwan and faces potential export restrictions that could limit sales to China. Additionally, it faces stiff competition in the networking space from Broadcom (AVGO +0.39%) and Cisco Systems (CSCO +3.05%).

Valuation comparisonMarvell looks cheaper than Arm using the Forward P/E, based on future earnings estimates, and the P/S ratio, which tracks sales over the past twelve months.

MetricArmMarvell TechnologyForward P/E119.5x65.2xP/S ratio55.3x25.7xValuation metrics include sourcing from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy in 2026?Arm and Marvell Technology are experiencing robust revenue growth, making both compelling semiconductor companies to invest in. While Arm is known for its dominance in the smartphone sector, it has expanded into AI central processing units (CPUs) for data center infrastructure. The company introduced its Arm AGI CPU in March.

While Arm is doing well, Marvell is the stock I would buy right now. Its AI business is expanding at a rapid pace, as evidenced by its record revenue of $2.7 billion in its fiscal second quarter, ended Aug. 1. The sum represents outstanding 37% year-on-year growth. That's just the start.

Marvell produced revenue of $8.2 billion in FY 2026, but on Oct. 6, it announced that it expects to hit $20 billion by FY 2028. The company even set a FY 2031 target of $70 billion to $90 billion in sales. That kind of incredible growth in the coming years points to the outsized demand it's seeing for its AI solutions.

I anticipated Marvell would do well amid the AI revolution, which is why I bought shares, but the revenue forecasts it shared recently showed just how much of a boost artificial intelligence demand is delivering, and the company is successfully capturing its share of this massive market. Adding to this, its share price valuation is far superior to Arm’s, making Marvell the no-brainer stock to buy between these two semiconductor giants.

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Key Takeaways Arm gains 11.5% in a month as AI adoption and demand for advanced computing infrastructure improved sentiment.ARM's fiscal Q1 revenues rose 22% to $1.29B, with data-center royalties more than doubling year over year.Its 43.54X forward sales multiple far exceeds the industry's 5.14X, warranting caution. Arm Holdings plc (ARM - Free Report) has gained 11.5% over the past month despite declining 10% over the past three months. The recent recovery suggests improving investor sentiment toward the semiconductor designer amid accelerating artificial intelligence (AI) adoption and expanding demand for advanced computing infrastructure.

                                                            Image Source: Zacks Investment Research

ARM's growing presence in data centers, increasing royalty revenues and opportunities in AI-powered processing support its long-term prospects. However, its elevated valuation raises questions about whether the recent rebound offers an attractive entry point. Let us examine the factors shaping ARM's investment outlook.

Expanding AI Investments Create Growth Opportunities for ARMThe accelerating pace of AI infrastructure development presents a significant opportunity for Arm. Technology companies are committing substantial resources to building data centers, developing advanced processors and expanding computing capacity to support increasingly sophisticated AI applications.

AI developer Anthropic's ambitious infrastructure spending plans underscore the massive investments required to support next-generation AI models. Meanwhile, major cloud providers, including Alphabet (GOOGL - Free Report) and Microsoft (MSFT - Free Report) , continue investing heavily in AI infrastructure and computing technologies. These investments should support sustained demand for advanced semiconductor architectures.

Arm Holdings stands to benefit from this transition through its energy-efficient processor designs, which are increasingly relevant to cloud computing, AI inference and edge applications. As computing workloads become more demanding, the need for processors capable of delivering higher performance without excessive power consumption should strengthen the company's market opportunities.

Additionally, the growing adoption of Arm-based architectures across data centers could diversify its revenue sources beyond smartphones, supporting a more balanced long-term growth profile.

Agentic AI Adoption Strengthens ARM's CPU ProspectsThe emergence of autonomous AI agents is creating additional opportunities for central processing units (CPUs). Unlike conventional AI applications primarily focused on model training, agentic systems require considerable general-purpose processing capabilities to coordinate tasks, manage workflows and execute instructions.

This development could accelerate demand for energy-efficient CPUs alongside specialized AI accelerators. Arm Holdings' expanding processor portfolio positions it to capture opportunities as enterprises deploy more sophisticated AI systems across cloud environments.

The company's first-quarter fiscal 2027 performance demonstrates this momentum. Revenues increased 22% year over year to $1.29 billion, supported by a 22% increase in royalty revenues to $715 million and a 23% rise in licensing revenues to $574 million.

Notably, data-center royalties more than doubled year over year, highlighting increasing adoption of Arm-based processors in cloud infrastructure. The company's growing penetration in higher-value computing markets should support future royalty expansion.

High-Margin Operations Support ARM's Earnings PotentialArm's intellectual property licensing business provides an important competitive advantage. Its established ecosystem enables semiconductor manufacturers to incorporate Arm architectures into their products, creating recurring licensing and royalty opportunities.

This business structure supports substantial profitability without requiring Arm to manufacture most of the chips based on its designs. In the first quarter of fiscal 2027, its non-GAAP gross margin reached 98.1%, demonstrating the profitability of its technology licensing operations.

The company also reported a non-GAAP operating margin of 41.2% compared with 39.1% in the year-ago period. Improving operating profitability, combined with expanding adoption of its advanced architectures, should strengthen earnings potential.

Furthermore, Arm's expansion into purpose-built processors could create additional revenue opportunities. However, this transition also introduces execution challenges and potentially different margin characteristics from its traditional licensing business.

Stretched Valuation Warrants Investor CautionDespite favorable growth prospects, ARM's premium valuation remains a significant concern. Based on the supplied valuation figures, the stock trades at a forward price-to-sales multiple of 43.54X, substantially above the semiconductor industry's approximately 5.14X.

Such an elevated multiple reflects considerable expectations for AI-driven growth, making the stock vulnerable to disappointments in revenue expansion or profitability.

                                                                 Image Source: Zacks Investment Research

Moreover, semiconductor demand remains sensitive to economic conditions, customer investment cycles and technology spending trends. Slower smartphone recovery or moderation in cloud infrastructure expenditure could weigh on growth.

Arm's increasing investments in product development may also pressure operating expenses. Consequently, its strong competitive positioning does not necessarily translate into attractive near-term investment returns at the current valuation.

How Do NVIDIA and Intel Compare With ARM?NVIDIA (NVDA - Free Report) represents an important comparison given its leadership in AI accelerators and data-center computing. NVIDIA benefits from demand for GPUs that power AI training and inference, while Arm provides CPU architectures that support complementary computing workloads. NVIDIA's established AI ecosystem highlights the scale of infrastructure opportunities available to semiconductor companies.

Intel (INTC - Free Report) offers another useful comparison as Arm expands into higher-performance CPUs. Intel maintains an established presence in processors for personal computers and data centers, making its competitive positioning relevant to Arm's expansion strategy. However, Intel's manufacturing-intensive operations differ substantially from Arm's traditional intellectual property licensing model, creating different profitability and capital requirements.

Holding ARM Appears PrudentARM remains well positioned to benefit from expanding AI infrastructure investments, rising demand for efficient processors and growing adoption of advanced computing architectures. Its strengthening data-center presence and attractive royalty economics support a favorable long-term growth outlook. Nevertheless, the stock's demanding valuation already reflects considerable optimism, leaving limited protection against weaker demand, increased competition or execution challenges. The recent share-price recovery also reduces the appeal of initiating fresh positions without a more compelling valuation. Existing shareholders may benefit from maintaining exposure to the company's long-term opportunities, while prospective investors should await a better entry point. Holding ARM appears prudent.

ARM carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Microsoft's coming product details will test whether Arm architecture can extend beyond efficiency into premium AI computing. Summary

Arm gained another flagship design, but unit economics remain undisclosed.

Arm Holdings ARM, the processor-architecture licensor, faces a fresh test of its Windows ambitions as Microsoft prepares to detail Surface Laptop Ultra and Nvidia's Arm-based RTX Spark platform, with shares down 1.6% to $297.63 at approximately 11:25 a.m. ET on October 7. According to The Verge, the event will put the new hardware in focus. For investors, the question is simple: can Arm turn another premium-PC showcase into meaningful royalty growth?

Nvidia's announcement describes RTX Spark as pairing a Blackwell GPU with a 20-core Grace CPU developed with MediaTek, an established Arm licensee. Microsoft, Nvidia and participating PC manufacturers previously targeted fall availability for machines built to handle local AI agents and demanding creative work. That gives Arm another route beyond smartphones. The commercial payoff still depends on how many systems sell and what each processor earns for Arm.

The valuation graphic puts the shares 52.01% above the $195.79 GF Value estimate, suggesting substantial growth expectations are already priced in. A premium Windows launch strengthens Arm's expansion story, but Arm disclosed neither expected shipment volumes nor incremental royalty content. An expensive laptop does not automatically mean a large royalty payment. The number investors need is Arm's revenue per shipped processor—and enough shipments to make it matter.

Disclosures I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.

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Annual nationwide educational celebration returns October 8 with hands-on science, baking soda rocket launches and real-world STEAM inspiration for students across the country

, /PRNewswire/ -- ARM & HAMMER™ Baking Soda will celebrate its third annual Baking Soda Rocket Day on October 8, bringing students together for a nationwide celebration of hands-on STEAM (Science, Technology, Engineering, Arts, and Math) learning, exploration and discovery. Since launching in 2024, Baking Soda Rocket Day has reached more than 200,000 students nationwide, using the power of a simple baking soda rocket to spark big questions and show young learners how exciting and accessible STEAM can be.

ARM & HAMMER™ Baking Soda will celebrate its third annual Baking Soda Rocket Day on October 8, bringing students together for a nationwide celebration of hands-on STEAM (Science, Technology, Engineering, Arts, and Math) learning, exploration and discovery. This year, Baking Soda Rocket Day will once again bring STEAM directly to students through in-person experiences, classroom resources and baking soda rocket launches across the country. At flagship events in Chicago and Houston, students will hear from leaders across science, engineering and other STEAM fields, including Emily Calandrelli (@TheSpaceGal) and representatives from Space Center Houston and LEGOLAND®, connecting classroom learning to real-world career possibilities. And through a continued partnership with Club for the Future™, students will have the opportunity to take their imagination beyond the classroom by creating messages that will travel to space aboard a future Blue Origin New Glenn mission.

"Curiosity is where innovation begins, and Baking Soda Rocket Day is about giving students the opportunity to see just how far that curiosity can take them," said Stacey Ramstedt, Chief Marketing Officer at Church & Dwight. "ARM & HAMMER Baking Soda has been part of families' everyday lives for generations, and we're proud to use that familiarity to make STEAM learning feel engaging and full of possibility. Having reached more than 200,000 students since launching this program, we're continuing to build on that impact and help inspire the thinkers, creators and problem-solvers of tomorrow."

Bringing Real-World STEAM Careers to the Classroom

This year's flagship celebrations will bring students face-to-face with leaders who have turned their own dreams into extraordinary careers, helping young learners see the possibilities that can begin with an interest in STEAM.

In Chicago, aerospace engineer, best-selling author, Emmy-nominated television host and the 100th woman to go to space, Emily Calandrelli (@TheSpaceGal), will return for her third year of Baking Soda Rocket Day, joining students at Chicago's Shoop Academy of Math, Science and Technology for a day of hands-on learning. Calandrelli will lead students through an interactive baking soda rocket experiment, demonstrating the science behind the launch while encouraging them to embrace creativity and experimentation.

"What can happen when you combine a little curiosity, creativity and a box of ARM & HAMMER™ Baking Soda? You've got the perfect recipe for discovery!" said Calandrelli. "Baking Soda Rocket Day gives students the chance to learn by doing – to experiment, ask questions and see science come to life right in front of them. I hope every student walks away feeling inspired to keep exploring, because you never know where that curiosity might take you."

In Houston, ARM & HAMMER Baking Soda is partnering with Space Center Houston to bring students even closer to the people and careers behind space exploration. As part of the partnership, Michael Baker, retired astronaut and veteran of four space flights, will join students to share firsthand stories from his time in space and highlight the many pathways to a career in the space industry.

"Baking Soda Rocket Day is a great opportunity to show students that a sense of discovery can be the first step toward an incredible career," said Baker. "I hope sharing my experiences helps students see that the possibilities are endless when you stay curious."

A Project Manager and a Master Model Builder from LEGOLAND® California and LEGOLAND® Florida Resorts who worked on the new indoor space-themed rollercoaster, Galacticoaster on both coasts, will join the flagship celebrations in both Chicago and Houston, giving students another look at how STEAM skills translate into unexpected real-world careers. Through interactive conversations with professionals who use creativity, engineering and problem-solving every day, students will learn how an interest in STEAM can open the door to careers that bring imagination and innovation to life.

And the inspiration won't stop with the day's rocket launches. This year, students will have the opportunity to send a piece of their own dreams beyond the classroom – and into space.

Launching Dreams to Space

ARM & HAMMER is once again teaming up with Club for the Future™ to bring its Message to the Stars campaign to Baking Soda Rocket Day. This year, students will create postcards and posters that will fly aboard a future Blue Origin New Glenn mission before being stamped "Flown to Space" and returned to their creators.

"Every piece of art we send to space carries more than a student's message; it carries the possibility that the young person who created it might one day be part of the team launching it there," said Heather Nelson, director, Club for the Future. "Through our partnership with ARM & HAMMER Baking Soda, we're giving students a tangible connection to space exploration and the careers that make it possible for millions of people to live and work in space for the benefit of Earth. Baking Soda Rocket Day helps us cultivate the explorers who will carry that vision forward."

Launching Curiosity Nationwide

Beyond the flagship events, students and educators across the country can join in on Rocket Day fun with resources designed to make STEAM exploration accessible from any classroom or backyard.

Using ARM & HAMMER Baking Soda and other familiar household materials, students can build and launch their own baking soda bottle rockets while exploring the scientific principles that make them soar.

To learn more about Baking Soda Rocket Day and discover how to get involved, parents and educators can visit BakingSodaRocket.com. ARM & HAMMER Baking Soda is available online and at major retailers nationwide. For product information, visit armandhammer.com.

About ARM & HAMMER™

For more than 170 years, ARM & HAMMER™ continues to provide trusted and hardworking products consumers love. ARM & HAMMER™ has all your needs covered from cleaning and laundry to personal and oral care to pets. For more information, please visit https://www.armandhammer.com.

About Church & Dwight Co. Inc.

Church & Dwight Co., Inc. (NYSE: CHD) founded in 1846, is the leading U.S. producer of sodium bicarbonate, popularly known as baking soda. The Company manufactures and markets a wide range of personal care, household, and specialty products under recognized brand names such as ARM & HAMMER®, TROJAN®, OXICLEAN®, FIRST RESPONSE®, NAIR®, ORAJEL®, XTRA®, BATISTE®, WATERPIK®, ZICAM®, THERABREATH®, HERO® and TOUCHLAND®. For more information, visit the Company's website.

About Club for the Future

Founded by Blue Origin, Club for the Future is a nonprofit with the mission to inspire and mobilize future generations to pursue careers in STEAM (science, technology, engineering, arts, and math) for the benefit of Earth. The Club and its partners are doing this through the Postcards to Space program, providing space-focused lessons and events, and activating ambassadors around the world. To date, Club for the Future has engaged with millions of individuals through its programs, initiatives, and collaborations.

Follow @ClubforFuture on Instagram, Threads, Facebook, and X, and visit clubforfuture.org.

About Space Center Houston

Space Center Houston's shared purpose is to bring people and space closer together. Over 1.3 million visitors and more than 250,000 students and educators visit each year to connect with the significance of space exploration to pursue a path in STEM or follow along as incredible feats of human spaceflight continue to make new discoveries. Space Center Houston is owned by the Manned Space Flight Education 501(c)3 nonprofit organization and generates an annual $185.5M economic impact to the Greater Houston area. Space Center Houston is the Official Visitor Center of NASA Johnson Space Center, a Smithsonian Affiliate, a Certified Autism Center, and is recognized by USA TODAY as a 10Best Science Museum. Learn more at spacecenter.org. 

About Club for the Future

Founded by Blue Origin, Club for the Future is a nonprofit with the mission to inspire and mobilize future generations to pursue careers in STEAM (science, technology, engineering, arts, and math) for the benefit of Earth. The Club and its partners are doing this through the Postcards to Space program, providing space-focused lessons and events, and activating ambassadors around the world. To date, Club for the Future has engaged with millions of individuals through its programs, initiatives, and collaborations.

Follow @ClubforFuture on Instagram, Threads, Facebook, and X, and visit clubforfuture.org.

About LEGOLAND Resorts

LEGOLAND® Resorts bring the LEGO® brand to life on an epic scale. Merlin Entertainments – which holds the exclusive rights to the LEGOLAND brand – currently operates 11 parks globally with locations spanning North America, Europe, and Asia – including properties in California, Florida, New York, Denmark, the United Kingdom, Germany, Dubai, Japan, Malaysia and China. It is realizing the growth potential of these theme parks by expanding them into 'mega-resort' short break destinations, offering guests themed accommodation, second gate attractions (including waterparks) and LEGO themed experiences that are rich in interactive features. Designed to provide creative, interactive, and educational experiences for families with children ages 2 to 12, LEGOLAND Resorts invite guests to step inside the colorful world of LEGO where imagination comes to life. See www.LEGOLAND.com for more information.

SOURCE Arm & Hammer Baking Soda (Church & Dwight Inc).

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CAMBRIDGE, England--(BUSINESS WIRE)--Arm Holdings plc (NASDAQ: ARM) will report financial results for the second quarter of fiscal year 2027 on Wednesday, Nov. 4, 2026, after market close. The company will host a conference call via audio webcast at 14:00 Pacific Time (17:00 Eastern Time / 22:00 Greenwich Mean Time) to review its financial results and business outlook.

The live audio webcast will be available at: https://edge.media-server.com/mmc/p/zyzi4u5w/ and a replay of the conference call can be accessed on http://investors.arm.com/ shortly afterwards. The replay will be available for four weeks.

About Arm

Arm is the foundational platform for AI, delivering power-efficient, high-performance computing that touches 100 percent of the connected global population. To meet the insatiable demand for compute, Arm’s platform spans core IP, advanced compute subsystems and purpose-built silicon, giving the world’s leading technology companies the flexibility to design, build and deploy AI at scale. Arm has the world’s largest computing ecosystem, including over 22 million developers, and together we are building the future of AI on Arm.

All information is provided “as is” and without warranty or representation. This document may be shared freely, attributed and unmodified. Arm is a registered trademark of Arm Limited (or its subsidiaries or affiliates). All brands or product names are the property of their respective holders. © 1995-2026 Arm Limited.

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Chip stocks are running hard, Arm is outpacing every major name in the sector, and AMD is sitting on a 39% monthly gain after a blockbuster acquisition. Whether that surge reflects genuine momentum or a rally already priced to perfection…

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Semiconductor shares are extending their recent run, and Advanced Micro Devices (NASDAQ:AMD | AMD Price Prediction) stock is moving with a chip complex that buyers are bidding up across the board. AMD stock is up 3% to $637.17 in morning trading, a gain that tracks the broader group closely.

Meanwhile, the iShares Semiconductor ETF (NASDAQ:SOXX) is up 3% to $592.69, which shows how far the buying has spread among chipmakers. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is up 0.6% to $768.59, so the broad market is trailing well behind the chip trade.

Notably, Arm Holdings (NASDAQ:ARM) stock is jumping 8% to $314.28, the biggest climb among the major chip names. NVIDIA (NASDAQ:NVDA) stock is rising 2% to $235.03, a firmer advance that keeps the sector’s largest company firmly in the rally. Broadcom (NASDAQ:AVGO) rounds out the group of large chipmakers tied to the same artificial intelligence infrastructure buildout; AVGO stock is gaining 3% to $353.67.

Sector Rally Carries AMD Higher A rally running across semiconductor shares as a group is lifting AMD stock alongside its largest peers. Sector-wide buying is what’s driving the gain in AMD stock during the current session. Recent quarterly reports from AMD, NVIDIA and Broadcom each topped Wall Street’s estimates, and that string of results has kept chipmakers tied to artificial intelligence spending in demand with buyers (the power, cooling, and networking suppliers riding the same AI expansion are the subject of a free report on seven non-chipmaker AI stocks).

On September 28, AMD announced that it had agreed to acquire World Labs, an AI company cofounded by Fei-Fei Li, in a transaction valued at $8.2 billion. The purchase extends AMD’s reach beyond processors and accelerators into artificial intelligence software and systems. That agreement is several sessions old, and it’s the main reason AMD has held the market’s attention in recent days.

Arm’s Royalty Model Sets the Pace Arm licenses instruction-set architecture and core designs to chipmakers and collects royalties on the units those customers ship. That model gives Arm leverage to shipments across the entire industry, which is why the stock can run harder than AMD stock when the whole chip complex rises.

The iShares Semiconductor ETF’s 2.8% advance sits just below the 3.5% gain in AMD stock, a narrow edge for the chipmaker over the fund. NVIDIA stock is trailing the fund slightly, which shows the sector’s biggest name riding along with the group.

AMD’s Monthly Run Raises the Stakes AMD stock is up 39% over the past month, a run that sets a high bar for whatever the company delivers next. One open question for AMD is whether that gain has already priced in the AI expansion the World Labs deal is meant to accelerate.

The bull case for AMD rests on the World Labs deal turning a processor leader into a broader artificial intelligence platform. Folding a privately held company into AMD takes time, and the monthly gain in AMD stock may already reflect much of that promise.

What to Watch Next Whether semiconductor shares hold their ground is worth tracking, since the move in AMD stock mirrors the group. A pullback in the iShares Semiconductor ETF could weigh on AMD stock as quickly as the sector bid lifted it. Any fresh detail from AMD on how World Labs fits into the company’s artificial intelligence plans could shape the next leg.

Anyone sizing up their exposure should adjust their holdings carefully given that AMD stock is up 39% over the past month. Share positions should reflect a chip rally that’s broad yet already stretched, with the same discipline applied to their Arm stakes.

Contact [email protected] for any questions or corrections.

As the demand for high-performance computing accelerates, investors often struggle to choose between the architects of chip design and the manufacturers of chipmaking hardware. Choosing between Arm (ARM +0.93%) and ASML (ASML -0.18%) requires understanding their distinct roles.

Arm licenses its intellectual property to hundreds of companies, earning royalties on nearly every smartphone sold globally. Meanwhile, ASML provides the essential machinery that allows foundries to print those designs onto silicon. Both companies are vital players among semiconductor stocks, but they offer different paths to growth.

The case for ArmArm operates a high-margin business model centered on licensing its compute platform and central processing unit designs. The company provides the fundamental blueprints that power the mobile world and is increasingly gaining traction in the automotive and cloud data center sectors. Because it does not manufacture physical chips, its asset-light model allows it to scale across the entire industry without the heavy costs of factory ownership.

In the fiscal year ended March 31, 2026, revenue reached nearly $4.9 billion, representing growth of approximately 22.8% compared with the prior fiscal year. The company reported a net income of roughly $904.0 million for the period. While its net margin of approximately 18.4% was slightly lower than the previous year, the company continues to see strong adoption of its latest architecture versions.

As of its March 2026 balance sheet, the current ratio stands at approximately 6.0x, which measures a company's ability to cover its short-term liabilities with its short-term assets. The debt-to-equity ratio, which compares total debt to shareholder equity, is roughly 0.1x. Note that stock-based compensation represented roughly 69% of operating cash flow, which inflates reported cash generation since SBC is a non-cash expense added back in the cash flow statement.

The case for ASML ASML occupies a unique position as the sole provider of extreme ultraviolet lithography machines. These massive, highly complex tools are the only way for chipmakers to produce the smallest and most advanced transistors. This technological moat makes the company an indispensable partner for any foundry aiming to support modern artificial intelligence applications.

In the fiscal year ended Dec. 31, 2025, revenue reached nearly $37.1 billion, a growth of approximately 15.6% over the prior fiscal year. The company achieved a net income of close to $10.9 billion for the year. This resulted in a healthy net margin of approximately 29.4%, reflecting the premium pricing power that comes with its specialized equipment monopoly.

As of its December 2025 balance sheet, the current ratio is approximately 1.3x. Its debt-to-equity ratio is roughly 0.1x, suggesting a conservative use of leverage relative to its equity. The company generated approximately $12.1 billion in free cash flow, which is the cash remaining after a business pays for its operating expenses and capital expenditures.

Risk profile comparisonArm faces risks related to the concentration of its architecture in the mobile market, where growth has slowed compared to earlier decades. The company also contends with the rise of open-source alternatives like RISC-V, which could eventually challenge its licensing dominance. Additionally, geopolitical tensions can impact its ability to license technology in certain sensitive regions, potentially limiting its total addressable market.

ASML is highly sensitive to the capital expenditure cycles of a few major chip manufacturers. If these customers delay their expansion plans, the company's hardware orders can experience significant volatility. Furthermore, international trade restrictions on advanced lithography tools, particularly regarding shipments to certain markets, remain a persistent challenge that could cap its long-term revenue potential.

Valuation comparisonASML appears significantly cheaper on a relative basis when comparing both its premium to earnings and its valuation relative to total sales.

MetricArmASML Forward P/E139.3x39.2xP/S ratio64.3x16.4xValuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

I'd go with ASML. Its position in the semiconductor industry is one of the most defensible in the world: It is the only company that makes the extreme ultraviolet lithography machines needed to produce the most advanced chips. Every chipmaker building AI hardware depends on ASML's equipment to do it, and there is no alternative. That kind of irreplaceable role in the global technology supply chain is extraordinarily rare.

There is a lot to like about how Arm makes its money. Its architecture powers virtually every smartphone, and royalty revenue more than doubled in the data center segment. This is a business that compounds reliably without depending on any single product cycle. For investors who value consistency and steady growth, it is a strong long-term hold.

Both companies benefit from the AI build-out, but from different angles. Arm earns a royalty when a chip is designed, while ASML earns revenue when that chip gets built. But as chip demand keeps growing, ASML sits at the only chokepoint in the entire supply chain that cannot be worked around. For a long-term investor, that is a compelling place to put your money.

Key Takeaways AppLovin posted Q2 revenue growth of 52.4% and adjusted EPS growth of 66.4% year over year.APP is expected to grow 2026 sales 40% and EPS 57%, versus 22% and 24%, respectively, for ARM.AppLovin trades at 16.13X forward P/E versus Arm at 107.7X, alongside stronger expected 2026 growth. Both AppLovin Corporation (APP - Free Report) and Arm Holdings (ARM - Free Report) are technology-driven companies capitalizing on the AI revolution. AppLovin leverages advanced AI-powered advertising algorithms and app monetization platforms, while ARM underpins AI innovation through its cutting-edge chip architectures that power high-performance AI hardware. This positions both as innovation-centric opportunities aligned with the accelerating adoption of artificial intelligence across industries.

Their common focus on deploying AI to enhance efficiency, scalability and measurable business outcomes places them at the forefront of a transformative technological era, one in which artificial intelligence is increasingly becoming a core driver of competitive differentiation and sustainable long-term growth.

The Case for APPAppLovin’s second-quarter revenues increased 52.4% year over year to $1.92 billion, representing exceptional growth. This suggests that the company’s advertising technology and AI-powered optimization capabilities continue to attract substantial spending. Revenues also rose about 4% sequentially, indicating the business continued expanding even before recently deployed model improvements began contributing meaningfully.

APP delivered second-quarter adjusted earnings of $3.76 per share, increasing 66.4% year over year. Sequential EPS growth of 5.6% further indicates that profitability continued to improve even during a quarter characterized by delayed model enhancements. The ability to produce earnings growth considerably faster than most large technology companies supports the strength of AppLovin’s advertising platform and cost structure. Continued earnings outperformance could also help rebuild investor confidence if upcoming revenue growth aligns more closely with expectations.

Consumer-advertiser spending reached a record level and stood 28% above fourth-quarter 2025, indicating that AppLovin is gaining traction beyond its traditional gaming customer base. Expanding into broader consumer advertising could materially enlarge the company’s addressable market and reduce its long-term dependence on gaming-model improvements. Management’s gradual focus on mid-market advertisers may also support more disciplined onboarding, allowing AppLovin to prioritize customers that fit the platform’s present capabilities.

Partnerships, improved creative tools and better data integration could eventually make the platform accessible to a wider group of smaller advertisers. Lead generation and connected television provide further potential avenues for expansion. These businesses remain early, but successful execution could create multiple growth engines and make AppLovin’s revenue base broader, more resilient and less concentrated over time.

The Case for ARMArm’s strategic improvement is the widening reach of its architecture beyond smartphones. Cloud servers, AI-enabled personal computers, intelligent vehicles, robotics and industrial automation now provide routes for licensing and royalty growth. This matters because the company’s historical dependence on mobile-device volumes exposed results to handset replacement cycles and uneven consumer demand. A broader market mix can materially reduce that concentration while increasing the number of chips containing Arm technology.

These opportunities also share a common requirement: high computing performance delivered within tight power and thermal limits. ARM’s established focus on energy efficiency therefore transfers effectively across multiple end markets instead of relying on a different technical proposition. The transition should not be viewed merely as diversification for its own sake. It creates several long-duration growth engines tied to cloud investment, edge intelligence, automation and connected devices, giving the company more ways to compound revenues even when an individual market temporarily slows.

Cloud infrastructure is becoming the strongest driver of Arm’s growth as hyperscale providers increase deployment of custom processors based on the Neoverse architecture. AI workloads demand enormous computing capacity, but data-center operators must also control electricity, cooling and physical infrastructure costs. Processors that deliver competitive performance with lower power consumption can therefore create savings across large server fleets. Arm benefits without needing to manufacture every finished chip because customers and semiconductor partners incorporate its architecture into internally designed platforms.

The Arm AGI CPU platform could become a new monetization channel beyond the company’s traditional licensing model. Management has indicated that customer demand has expanded after launch, manufacturing capacity has been secured and discussions with additional customers continue to advance. Those signals suggest that the product addresses a requirement for efficient, AI-oriented computing rather than representing a purely experimental initiative. A more complete CPU offering may allow Arm to capture greater value from its intellectual property and deepen relationships with large customers seeking deployable solutions.

It could also provide insight into workload requirements, helping guide future architecture and software development. Successful execution would give Arm a more balanced model combining ecosystem-wide royalties with targeted products serving high-value AI infrastructure demand.

How Do Estimates Compare for APP & ARM?According to the Zacks Consensus Estimate, APP is poised to deliver a robust 40% year-over-year increase in sales, along with an impressive 57% surge in earnings per share for 2026, highlighting strong operations and accelerating profitability from its AI-driven advertising platform.

                                                               Image Source: Zacks Investment Research

In contrast, ARM is expected to report a more modest 22% sales growth and a 24% increase in EPS, suggesting a steadier growth trajectory as it continues to scale its licensing model and invest in AI-enabled chip innovation.

                                                                  Image Source: Zacks Investment Research

While both companies are benefiting from secular tech tailwinds, APP's significantly higher earnings momentum may reflect greater short-term operational efficiency and demand capture in the evolving digital advertising landscape.

Valuation Favors APP's Balanced Growth and ProfitabilityArm trades at a forward 12-month P/E of 107.7X, well below its median of 137.37X. It still carries a steep premium, reflecting lofty expectations tied to its AI and IoT potential. In contrast, AppLovin’s forward P/E of 16.13X is below its median of 27.57X, suggesting a more grounded valuation.

Given APP’s stronger earnings growth outlook and operational momentum, its current valuation appears more attractive. Investors may find better near-term upside in APP, especially as its AI-driven ad tech model continues to convert growth into profitability more effectively.

Verdict: AppLovin Holds the EdgeBoth AppLovin and Arm are well-positioned to benefit from the continued expansion of artificial intelligence, but AppLovin appears to offer the more compelling risk-reward profile at current levels. The company combines strong revenue growth, accelerating profitability, expanding market opportunities and an increasingly sophisticated AI-driven platform that is gaining traction beyond its traditional gaming roots.

ARM remains a high-quality company with a powerful ecosystem and deep exposure to long-term AI and cloud infrastructure trends. However, much of that potential appears reflected in investor expectations. While both stocks remain attractive AI plays, AppLovin's combination of operational momentum, growth prospects and a more reasonable valuation makes it better for investors seeking AI-driven upside today.

APP and ARM currently carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arm is dropping nearly twice as hard as its closest chip peers, and the reason goes well beyond inflation fears and profit taking. A $25 billion loan tied directly to Arm's share price gives SoftBank a stake in every tick…

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Chip stocks are under pressure across the group, and Arm Holdings (NASDAQ:ARM | ARM Price Prediction) is the worst performer among large semiconductor names. Arm stock is down 9% to $282.46 in morning trading, and the company hasn’t released any announcement that accounts for the drop. That leaves the gap between Arm and the rest of the chip group as the defining feature of the move.

Qualcomm (NASDAQ:QCOM) stock is down 6% to $189.14, a steep decline that still trails the damage at Arm. Meanwhile, Marvell Technology (NASDAQ:MRVL) stock is down 5% to $249.46, the smallest loss of the three. With Arm, Qualcomm and Marvell shares all listed on the Nasdaq exchange and all lower, the synchronized drop points to selling across the whole group.

The iShares Semiconductor ETF (NASDAQ:SOXX) is down 3%. At the same time, the Invesco QQQ Trust (NASDAQ:QQQ) is down 1.3%, so the chip fund is falling well beyond the wider tech market. Such a spread shows Arm leading a sector move with no news of its own, interestingly enough.

Oil and Inflation Fears Hit Chip Valuations Semiconductor stocks are selling off as higher oil prices revive inflation concerns, which pressures rate-sensitive technology valuations across the group. Profit taking is compounding that pressure in the names that have run hardest, and that selling is landing with the most force on Arm stock, which is falling well beyond the semiconductor fund.

Arm stock is up 158% year to date (YTD), a re-rating built on data center and agentic artificial intelligence demand. The current wave of profit taking is reversing that run, a dynamic our free handbook on riding and exiting a mania walks through. With little valuation buffer left, Arm is dropping further than the group as rate expectations shift against long-duration growth stocks.

SoftBank’s Loan Adds a Second Pressure Point SoftBank Group holds a majority stake in Arm. It increased a margin loan backed by its Arm shares to $25 billion from $20 billion earlier this month, according to Bloomberg. A loan secured by Arm shares ties SoftBank Group’s borrowing capacity to where Arm stock trades, a sensitivity Arm stock didn’t previously carry.

That link sits outside Arm’s royalty business and chip demand entirely, giving Arm a pressure point Qualcomm and Marvell don’t share, and every drop in Arm stock shrinks the value of the collateral behind SoftBank Group’s loan. The bear case for Arm combines both threads. A stock re-rated this fast has the furthest to fall when rates turn, and the majority owner’s funding now moves with Arm stock.

What the Peer and Fund Figures Show Qualcomm and Marvell shares are both falling faster than the iShares Semiconductor ETF, which shows the selling concentrated in large chip names. Arm is out in front of that group by a wide margin, and that gap tells a clearer story than the selloff itself. Marvell stock’s smaller loss keeps it closest to the semiconductor fund, while Qualcomm lands between the two.

The bull case for Arm rests on the lack of company news, since the drop tracks oil, rates and profit taking with Arm’s data center and agentic artificial intelligence demand story intact. A shift in rate expectations could lift Arm stock as quickly as the current pressure pulled it lower.

For Qualcomm and Marvell, the gap versus Invesco QQQ Trust shows chip stocks taking far more selling than the wider technology market. That makes the decline in both names look like a sector call on rates and oil, with company-specific concerns playing no visible role.

What to Watch Next Signs that oil prices and inflation concerns are cooling are worth watching, since that pressure set off the chip selling. Arm stock has shown the most sensitivity to that pressure among these three names, given its rapid re-rating. Any easing in inflation worries could relieve the rate-sensitive valuations weighing on Arm.

Anyone holding Arm shares should size their position so a swing of this magnitude fits within their risk tolerance, since Arm stock is moving harder than the semiconductor group. Those building their exposure to Arm could do it in stages, which limits the damage if the pullback deepens. Keeping their starting allocation modest gives Arm holders room to reassess once oil and rate pressures settle.

SoftBank Group’s loan keeps a second source of volatility attached to Arm stock, separate from anything in Arm’s operating results. Qualcomm and Marvell holders can weigh their allocation against the gap between the SOXX semiconductor fund and the Invesco QQQ Trust, which shows how far the chip selling extends. The next read on oil and inflation could set the tone for Arm, Qualcomm and Marvell from here.

Contact [email protected] for any questions or corrections.

QRG Capital Management Inc. increased its position in shares of Arm Holdings PLC Sponsored ADR (NASDAQ:ARM – Free Report) by 32.1% during the second quarter, according to its most recent Form 13F filing with the SEC. The firm owned 9,591 shares of the company’s stock after buying an additional 2,330 shares during the period. QRG Capital Management Inc.’s holdings in ARM were worth $3,401,000 at the end of the most recent reporting period.

Other hedge funds and other institutional investors also recently bought and sold shares of the company. Hyperion Asset Management Ltd lifted its position in ARM by 28.0% during the 4th quarter. Hyperion Asset Management Ltd now owns 1,836,185 shares of the company’s stock worth $200,713,000 after acquiring an additional 401,594 shares during the period. Capital Research Global Investors increased its holdings in ARM by 5.1% in the fourth quarter. Capital Research Global Investors now owns 1,805,110 shares of the company’s stock valued at $197,332,000 after buying an additional 86,978 shares in the last quarter. Franklin Resources Inc. lifted its position in shares of ARM by 0.7% during the 4th quarter. Franklin Resources Inc. now owns 1,461,410 shares of the company’s stock valued at $159,747,000 after acquiring an additional 10,385 shares during the period. Employees Provident Fund Board purchased a new stake in shares of ARM during the 4th quarter worth approximately $120,241,000. Finally, SG Americas Securities LLC grew its holdings in shares of ARM by 265.6% in the 1st quarter. SG Americas Securities LLC now owns 971,067 shares of the company’s stock worth $146,903,000 after acquiring an additional 705,459 shares during the period. 7.53% of the stock is currently owned by institutional investors and hedge funds.

Insider Activity In other news, CFO Jason Child sold 10,400 shares of ARM stock in a transaction dated Monday, September 21st. The stock was sold at an average price of $300.00, for a total transaction of $3,120,000.00. Following the sale, the chief financial officer directly owned 153,442 shares of the company’s stock, valued at approximately $46,032,600. The trade was a 6.35% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan.

ARM Stock Performance Shares of NASDAQ:ARM opened at $310.32 on Friday. The stock has a 50-day simple moving average of $264.04 and a 200-day simple moving average of $254.13. The stock has a market capitalization of $331.45 billion, a P/E ratio of 319.92, a PEG ratio of 9.08 and a beta of 3.89. Arm Holdings PLC Sponsored ADR has a 1 year low of $100.02 and a 1 year high of $452.70. ARM (NASDAQ:ARM – Get Free Report) last released its quarterly earnings data on Thursday, July 30th. The company reported $0.45 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.40 by $0.05. The company had revenue of $1.29 billion during the quarter, compared to analyst estimates of $1.26 billion. ARM had a net margin of 20.25% and a return on equity of 12.24%. The business’s quarterly revenue was up 22.4% compared to the same quarter last year. During the same quarter in the prior year, the business earned $0.35 earnings per share. Analysts predict that Arm Holdings PLC Sponsored ADR will post 1.15 earnings per share for the current year.

Wall Street Analyst Weigh In Several equities research analysts recently commented on ARM shares. Rosenblatt Securities decreased their price objective on shares of ARM from $270.00 to $250.00 and set a “buy” rating on the stock in a research report on Friday, July 31st. New Street Research raised shares of ARM from a “neutral” rating to a “buy” rating and set a $260.00 price target on the stock in a report on Thursday, July 30th. Morgan Stanley increased their price target on shares of ARM from $202.00 to $212.00 and gave the company an “equal weight” rating in a research report on Thursday, July 30th. Weiss Ratings reissued a “hold (c)” rating on shares of ARM in a research note on Friday, July 17th. Finally, Royal Bank Of Canada reduced their target price on ARM from $475.00 to $340.00 and set an “outperform” rating on the stock in a research note on Thursday, July 30th. One research analyst has rated the stock with a Strong Buy rating, eighteen have issued a Buy rating, seven have issued a Hold rating and one has assigned a Sell rating to the company’s stock. According to data from MarketBeat, the company currently has an average rating of “Moderate Buy” and a consensus price target of $305.72.

Read Our Latest Stock Report on ARM

Key Stories Impacting ARM Here are the key news stories impacting ARM this week:

Positive Sentiment: Meta’s Muse launch is reinforcing expectations that AI agents will drive greater demand for CPUs, potentially benefiting Arm’s processor architectures and expanding future licensing and royalty revenue. However, workload growth must still translate into higher chip shipments, architecture share and royalties. Arm Stocks Surge as Muse Makes CPUs Matter Again Positive Sentiment: Investors are buying ARM after its recent decline, with the rebound outperforming much of the semiconductor group. The move reflects renewed confidence in Arm as a potential beneficiary of data-center and agentic-AI expansion. Arm Climbs as Buyers Return After Sharp Pullback Neutral Sentiment: The AI thesis is attractive, but analysts note that more CPU cores alone do not guarantee proportional financial gains. Arm must capture meaningful architecture share and favorable chip mix before higher AI usage produces substantial royalty growth. Negative Sentiment: Valuation remains a major risk. With the shares trading at an exceptionally high earnings multiple, one recent analysis argues that ARM is priced too aggressively and leaves limited room for execution disappointments or a slowdown in AI enthusiasm. Don’t Buy Arm Holdings This Expensively Negative Sentiment: CFO Jason Child sold 10,400 shares for approximately $3.12 million at an average price of $300 under a pre-arranged Rule 10b5-1 plan. Because he retained a substantial position and the sale was scheduled, it is a limited bearish signal, but it may still add to investor caution at elevated prices. ARM CFO Jason Child Sells Shares ARM Profile (Free Report)

Arm Holdings plc is a semiconductor and software intellectual property company headquartered in Cambridge, England. Rather than manufacturing chips, Arm develops processor architectures and technology designs that it licenses to semiconductor companies, device manufacturers and other technology businesses for use in their own products.

Arm’s portfolio includes central processing unit (CPU) architectures and processor cores, graphics processing units (GPUs), systems IP, interconnect technology, security solutions and related software and development tools.

See Also Five stocks we like better than ARM Costco Ends Its Fiscal Year on a High Note, Eyes Big Expansion Cracker Barrel Stock Is Rallying Again, But the Turnaround Still Has a Traffic Problem Oracle’s Force Majeure Notice Exposes a Bigger Problem for the AI Build-Out Oil May Be Stronger Than It Looks—And Diamondback Is on Sale

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Arm Holdings plc (NASDAQ:ARM) shares are trading higher on possible continued momentum tied to demand for its CPU designs following Meta’s Muse AI agent launch.

ARM stock is among today’s top performers. Why is ARM stock surging? Arm Benefits From Growing AI Inference DemandArm gained alongside a broader semiconductor rally on September 23 linked to AI hardware demand, with investors focusing on AI-driven CPU demand after Meta Platforms reported rapid uptake of its Muse AI agent for CPU-based inference workloads. Arm’s CPU designs have been highlighted as a key foundation for handling Muse-related AI inference volumes, reinforcing the company’s relevance in broader AI infrastructure discussions.

Arm’s Rally Extends on AI Momentum and Bullish Analyst CallsThe move builds on a stretch of strong gains for Arm, including a more than 16% surge on September 21 tied to Meta’s Muse adoption boosting demand for AI server processors, alongside Piper Sandler’s initiation of coverage with an Overweight rating and a $320 price target, citing AI server design wins and a Meta custom CPU project. Arm CEO Rene Haas has also said demand for the company’s new AGI CPU is “off the charts” and could exceed $2 billion in revenue.

Read Next

Arm Shares Edge HigherARM Price Action: At the time of publication, Arm shares are trading 4.46% higher at $320.00, according to data from Benzinga Pro.

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Key Takeaways ARM, AMD, and CRWV have all been drawing attention lately from investors. All three reflect pieces of the broader AI buildout, with each also seeing big growth. AMD and ARM shares have seen explosive share gains in September, whereas CRWV hasn't seen the same. Three stocks firmly tied to the AI infrastructure buildout, Arm Holdings (ARM - Free Report) , Advanced Micro Devices (AMD - Free Report) , and CoreWeave (CRWV - Free Report) , have all been drawing extra investor attention lately.

Let’s take a closer look at the recent news surrounding each.

Arm Shares Climb 40% in SeptemberArm Holding shares have surged recently as positivity surrounding agentic AI has fueled optimism for stronger CPU demand. Increasingly capable AI agents could require considerably more CPU-based compute alongside GPUs, and the recent popularity of consumer-facing tools like Meta’s Muse AI agent has only added to the optimism.

In addition, ARM CEO Rene Haas recently expressed increased confidence surrounding the company’s new AGI CPU, indicating that demand remains robust and manufacturing supply is currently the bigger constraint.

Recent results have continued to show strong demand, with ARM generating record revenue of $1.3 billion in its latest release, up 22% YoY, while Data Center royalties more than doubled.

Image Source: Zacks Investment Research

ARM’s recent gain in attention reflects growing optimism surrounding its opportunity in AI-focused data center CPUs, with EPS revisions remaining on a bullish trajectory across the board. Impressively, the stock is up nearly 40% in September alone thanks to the positivity.

Image Source: Zacks Investment Research

AMD Sees Explosive Data Center GrowthAdvanced Micro Devices shares have been similarly red-hot, recently pushing above the $1 trillion market-cap mark for the first time as positivity for AI infrastructure demand continues to grow.

The company has continued to post strong quarterly results, with AMD’s Data Center sales coming in at $6.7 billion in its latest period, reflecting a triple-digit 107% YoY growth rate. AMD expected Data Center sales to accelerate in the back half of 2026, underpinning a favorable growth outlook for both earnings and sales.

Overall sales growth has been stellar across recent periods, regularly showing accelerations.

Image Source: Zacks Investment Research

EPS expectations have trended higher across recent months, continuing to provide a solid near-term momentum backdrop for shares, which are up more than 30% in September alone. Surpassing the $1 trillion market-cap hurdle is a huge win for the company, joining an elite group overall. 

Image Source: Zacks Investment Research

CoreWeave's Steep Buildout CostsCoreWeave similarly remains at the forefront of AI infrastructure names, though shares haven’t seen nearly as much positivity relative to the two mentioned above, up roughly 3% in September.

The company exited Q2 with a massive $104.2 billion revenue backlog, up 246% YoY, with quarterly revenue jumping 112% to roughly $2.6 billion.

Image Source: Zacks Investment Research

While demand is undoubtedly strong, the heavy capital needed to match it has weighed on sentiment, with the company recently announcing plans to raise billions of dollars by selling new stock and debt.

EPS revisions have been on a downward trajectory as a result of the capital-intensive buildout.

Image Source: Zacks Investment Research

Bottom Line

Arm Holdings (ARM - Free Report) , Advanced Micro Devices (AMD - Free Report) , and CoreWeave (CRWV - Free Report) have all been seeing increased attention given their roles in the AI frenzy. All three are seeing strong growth overall, though financing costs have largely weighed down momentum surrounding CRWV.

Meta Platform's (META +11.43%) new Muse personal artificial intelligence (AI) agent is off to a fast start.

After being the most downloaded free iPhone app in the U.S. for the past three days, according to Sensor Tower, Muse has investors excited about a potential boom in AI agent-fueled sales of central processing units (CPUs).

That, in turn, is driving up the stock prices of the leading CPU makers. Here's how some of the top AI chip stocks performed on Monday:

Arm Holdings (ARM +17.16%), up 17% Intel (INTC +12.14%), up 12% Advanced Micro Devices (AMD +9.95%), up 10%

Image source: Getty Images.

Meta's Muse is grabbing investors' attention Meta's new AI agent promises to quickly, easily, and securely perform multiple tasks for users, such as sorting email, booking reservations, and managing calendars.

Muse is more accessible than other popular agentic AI projects, such as OpenClaw. It's also backed by Meta's tremendous data collection and distribution capabilities, thanks to the social media giant's staggering 3.6 billion daily active users.

In turn, analysts believe Muse has the potential to attract hundreds of millions of users in the coming months. That would likely make it the most popular AI agent on the market.

AI agents are set to boost demand for CPU makers While AI model training requires mostly GPU-based compute, agentic AI is powered more by inference, which requires a greater proportion of CPUs to handle tasks like planning and orchestration.

A forthcoming wave of agentic AI-powered applications is thus expected to drive demand for CPUs sharply higher in the coming years. ARM sees the server CPU market surging by 35% annually to $120 billion by 2030, while AMD predicts 50% annual growth to $220 billion by the end of the decade.

As the leading designers of CPUs and related infrastructure, Intel, AMD, and Arm stand to profit handsomely from these trends.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Arm Holdings, Intel, and Meta Platforms. The Motley Fool has a disclosure policy.

Marley Kayden and Rick Ducat tackle today's Big 3 by highlighting three stocks surging to the upside on Monday's trading session. Marley talks about the AI-tied headlines behind AMD Inc. (AMD), Intel (INTC), and Arm (ARM).

Meta's new Muse AI agent just triggered a violent repricing across processor names, and the three companies catching the biggest moves share almost nothing in common except a suddenly crowded bull thesis.

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Semiconductor names are surging Monday as investors reprice the CPU demand thesis. Meta Platforms (NASDAQ:META | META Price Prediction) and its Muse artificial intelligence agent are driving the move, signaling that inference workloads are ramping faster than expected and that autonomous AI agents could materially raise CPU footprint per unit of compute.

Arm Holdings (NASDAQ:ARM) stock is up 13% to $312.46, signaling traders view the Muse reception as a structural royalty tailwind. Meanwhile, Intel (NASDAQ:INTC) shares are climbing 12% to $121.38, amplified by recent CEO commentary on supply-constrained demand. Advanced Micro Devices (NASDAQ:AMD) stock is advancing 9% to $611, picking up the same demand signal as a merchant challenger.

Chip sector proxies, while still up substantially, still lag the three aforementioned stocks. The iShares Semiconductor ETF (NASDAQ:SOXX) is up 3% to $551.4, while the Invesco QQQ Trust is up 2% to $735.14, locating today’s action in processor names rather than a general chip bid.

Meta’s Muse Agent Reignites the CPU Bet No company announcement from Arm, Intel or AMD accompanies today’s session. All three are being repriced on the reception of Meta Platforms’ consumer application, a demand signal at some distance from any order the chip names have written. Autonomous AI agents sharply increase the need for inference, the process of running a trained model against live data, and inference work requires CPUs alongside accelerators for orchestration and data movement.

The three companies reach the same thesis through very different economics. Arm licenses the instruction-set architecture and core designs that processors are built on and earns royalties on volume, and it owns no fabs. Intel designs and manufactures its own processors, while AMD designs processors and has them manufactured by outside foundries.

Why Arm Leads the Chip Group Arm leads because it earns on architecture rather than any single socket. A broad increase in server processor volumes reaches Arm as a royalty on units it didn’t have to win individually. Arm has estimated that the server CPU market could reach $120 billion by 2030, anchoring the bull case being priced in this morning.

The complication is that today’s trigger is another company’s application, sitting at two removes from Arm’s revenue and capable of cooling as quickly as it arrived. Arm enters this session already well above where the stock traded a month ago, so today’s move adds to a re-rating rather than starting one.

Intel and AMD Take Different Paths Intel designs and manufactures its own processors, so a volume upswing must reach the company through orders it books at its fabs. Chief executive Lip-Bu Tan said last week that Intel can meet only 50% of customer demand, framing the CPU cycle as supply-constrained. The comment amplifies Intel shares today, since incremental agentic workload lands on an order book already backlogged.

AMD designs processors and has them manufactured by outside foundries, which gives AMD the same exposure to a volume upswing but through units it must win rather than royalties it accrues. That’s why the AMD move today, while trailing Arm and Intel, still lands well ahead of the sector fund’s gain.

What to Watch Next Arm shares enter this session already extended, so today’s gap adds to a re-rating rather than starting one. Investors can watch for whether Arm, Intel and AMD hold their lead over the sector fund into the close, since a narrowing would suggest the rally is broadening into a plain sector bid rather than staying rooted in processor names.

Traders may want to keep an eye on whether the next round of hyperscaler capex commentary shows the agentic AI demand signal that today’s tape is pricing into Arm, Intel and AMD. All of that buildout still has to be powered, cooled, and networked by somebody, and we pulled together seven of those suppliers in a free AI infrastructure report.

Shareholders opening new positions in Arm, Intel or AMD should moderate their entries, since the scale of the single-session move already prices in a favorable read and Meta Platforms’ Muse reception is a consumer signal rather than a booked order at any of the three chip names.

Contact [email protected] for any questions or corrections.

Investors choosing between Arm Holdings (ARM +4.04%) and ASML Holding N.V. (ASML +3.08%) face a classic dilemma: do you buy the architect of mobile computing or the gatekeeper of advanced chip manufacturing?

Arm licenses its energy-efficient architecture to nearly every chipmaker, while ASML builds the massive machines that print those designs onto silicon. Both companies are critical to the tech ecosystem, but they capture value at different stages of the production cycle and offer distinct financial profiles for investors.

The case for ArmArm designs the compute platform and licenses high-performance, energy-efficient CPU products to other semiconductor firms. Its technology is currently deployed in more than 350 billion chips, powering over 99% of the world's smartphones. This licensing model allows the company to earn royalties every time a device containing its technology is sold.

In the fiscal year ended March 31, 2026, revenue reached $4.9 billion, which represented a growth rate of 22.8% compared with the prior fiscal year. Net income for the period was $904 million, yielding a net margin of 18.4%. This performance continued a steady upward trend in both top-line sales and overall profitability for the architecture company.

As of its March 2026 balance sheet, the debt-to-equity ratio was 0.1x, meaning the company relies very little on borrowed money relative to shareholder equity. The current ratio was 6.0x, which measures the company's ability to pay short-term bills with cash-equivalent assets. Free cash flow reached $979 million, though stock-based compensation (SBC) represented roughly 69% of operating cash flow, which inflates reported cash generation since SBC is a non-cash expense added back in the cash flow statement.

The case for ASML Holding N.V.ASML is the sole provider of the extreme ultraviolet (EUV) lithography machines required to manufacture the most advanced chips. As a leader among semiconductor stocks, it sells these massive systems to the world's largest chipmakers. Its machines use light to print complex patterns on silicon wafers, enabling the continued miniaturization of electronics.

In the fiscal year ended Dec. 31, 2025, revenue reached approximately 32.7 billion euros, compared to the previous year's 28.3 billion euros. Net income was 9.6 billion euros, resulting in a net margin of 29.4%. These results show the company's ability to maintain high profitability while expanding its presence in the global market.

As of its December 2025 balance sheet, the company maintained a debt-to-equity ratio of 0.1x. The current ratio was 1.3x, showing that the company has enough short-term assets to cover its immediate liabilities. Free cash flow for the year reached 11.1 billion eruos, reflecting the significant amount of cash left after paying for operations and capital equipment.

Risk profile comparisonArm faces competition from open-source alternatives like RISC-V, which could threaten its licensing dominance if more manufacturers move away from proprietary designs. Additionally, the company is highly dependent on the smartphone market, where growth has slowed in recent years. This concentration makes it vulnerable to any downturn in consumer electronics spending, although it is expanding into data center CPUs.

ASML deals with significant geopolitical risks, particularly regarding export restrictions on high-tech equipment to China. The company also faces the risk of a cyclical downturn in the semiconductor industry, which can lead to canceled or delayed orders for its expensive machinery. Managing the high research and development costs for next-generation machines remains a constant financial pressure.

Valuation comparisonArm currently trades at a significant premium to ASML based on both its sales and future earnings estimates.

MetricArmASML Holding N.V.Forward P/E125.0x27.9xP/S ratio57.3x16.5xValuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy in 2026?Both ASML and Arm offer investors exposure to the artificial intelligence sector. ASML's indispensable EUV lithography equipment for making advanced AI chips gives it a legal monopoly, as competitors have not been able to duplicate its technological achievements. Arm is the dominant energy-efficient chip architecture and licensing powerhouse that has expanded from its focus on smartphones to AI data center CPUs.

Both companies are worth investing in. Choosing between them depends on the factors that matter most to you. ASML is ideal for income-oriented investors because it pays a dividend, while Arm does not. Shares in the maker of EUV lithography machines also sport a lower valuation.

Arm is more for growth-oriented investors. The company's sales are growing faster than ASML's, as demonstrated by its nearly 23% year-over-year increase in fiscal 2025 sales. In its fiscal first quarter, which ended June 30, it experienced 22% year-over-year revenue growth to $1.3 billion. Arm expects its tech will continue to see demand as physical AI systems, such as robots, become more widespread.

The race to power artificial intelligence has created two distinct champions in Arm (ARM +4.04%) and SK Hynix (SKHY +2.46%). Both companies serve the high-demand chip market, but they play very different roles.

Arm designs the energy-efficient architectures used by almost every smartphone maker, while SK Hynix produces the massive amounts of memory required for high-performance computing. Comparing these two businesses reveals a choice between a high-margin licensing model and a capital-intensive manufacturing powerhouse.

The case for ArmArm licenses its intellectual property to chip designers, although now, it's manufacturing hardware as well. This allows the company to collect royalties on hundreds of billions of chips in the semiconductor stocks space while keeping overhead relatively low. Its architecture is becoming increasingly vital in data centers where power efficiency is a top priority for cloud providers.

In the fiscal year ended March 31, 2026, revenue reached $4.9 billion. This represented a growth of 22.8% compared with the prior fiscal year. The company reported net income of $904 million, resulting in a net margin of 18.4%.

As of its March 2026 balance sheet, the debt-to-equity ratio was 0.1x. This ratio measures total debt against shareholder equity, with lower numbers typically suggesting a more stable financial foundation. The current ratio, which measures the ability to cover short-term debts with liquid assets, was 6.0x. Free cash flow for the year was $979 million. Note that stock-based compensation (SBC) represented 69% of operating cash flow, which inflates reported cash generation since SBC is a non-cash expense added back in the cash flow statement.

The case for SK HynixSK Hynix is a global leader in memory solutions, specifically high-bandwidth memory (HBM) used in artificial intelligence servers. Unlike designers, it operates massive fabrication plants to produce DRAM and NAND flash memory. Its products are essential for high-performance computing tasks that require rapid data access.

In the fiscal year ended Dec. 31, 2025, revenue reached 97.2 trillion Korean won. This was an increase of 46.8% year over year. The company achieved net income of 42.9 trillion won, which translates to a net margin of about 44.2%.

On its December 2025 balance sheet, the debt-to-equity ratio was 0.2x. Its current ratio stood at 1.9x, indicating sufficient liquidity to meet upcoming financial obligations. Free cash flow for the fiscal year ended Dec. 31, 2025, was roughly 18.2 trillion won.

Risk profile comparisonArm faces risks associated with the complex geopolitical landscape, particularly regarding its operations and revenue in China. The company also depends on a small number of customers for its licensing revenue, which can lead to volatility if a major partner shifts its design strategy. Changes in the open-source architecture landscape could also challenge its proprietary design dominance.

SK Hynix operates in a highly cyclical industry where memory prices can fluctuate based on global supply and demand. Competition from rivals like Samsung and Micron Technology remains intense, often leading to aggressive pricing strategies. Additionally, the high capital expenditures required to maintain state-of-the-art factories can strain financial resources during market downturns.

Valuation comparisonSK Hynix trades at a significantly lower Forward P/E and P/S ratio compared to Arm, suggesting a more conservative valuation for the memory giant.

MetricArmSK hynixForward P/E125.0x5.4xP/S ratio57.3x9.7xValuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy in 2026?For investors looking to capitalize on the semiconductor industry's AI tailwind, Arm Holdings and SK Hynix are compelling stocks. Both are worthwhile investments for different reasons.

Arm reported a 22% year-over-year increase in revenue to $1.3 billion in its fiscal first quarter, which ended June 30, thanks to record Q1 licensing and royalty income. It expects sales growth to extend into Q3 with revenue forecasted to reach $1.4 billion. In an effort to expand, the company is moving into semiconductor chip production for its data center CPUs, rather than merely licensing its technology. Like other chipmakers in the industry, Arm will be a fabless provider, outsourcing the actual manufacturing.

South Korean memory giant SK Hynix began offering American depositary shares on July 10 of this year in a sign that investor appetite for AI memory chip stocks is strong. The company achieved record results in Q2, with revenue of 79.3 trillion won, representing an impressive 51% increase just from its Q1 sales.

SK Hynix also commands over 50% of the HBM market, which is seeing robust customer demand due to AI. Given its much lower share price valuation, HBM market position, and outstanding business performance, the better stock to buy is SK Hynix.

NVIDIA (NASDAQ:NVDA – Get Free Report) and ARM (NASDAQ:ARM – Get Free Report) are both large-cap technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, valuation, risk, earnings and profitability.

Analyst Ratings This is a summary of current ratings and recommmendations for NVIDIA and ARM, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score NVIDIA 0 2 50 3 3.02 ARM 1 7 18 1 2.70 NVIDIA presently has a consensus target price of $324.34, indicating a potential upside of 47.87%. ARM has a consensus target price of $305.72, indicating a potential upside of 15.41%. Given NVIDIA’s stronger consensus rating and higher possible upside, equities research analysts clearly believe NVIDIA is more favorable than ARM.

Profitability This table compares NVIDIA and ARM’s net margins, return on equity and return on assets. Net Margins Return on Equity Return on Assets NVIDIA 63.66% 96.04% 71.00% ARM 20.25% 12.24% 9.41% Institutional & Insider Ownership 65.3% of NVIDIA shares are owned by institutional investors. Comparatively, 7.5% of ARM shares are owned by institutional investors. 3.9% of NVIDIA shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings This table compares NVIDIA and ARM”s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio NVIDIA $302.97 billion 17.45 $120.07 billion $7.91 27.73 ARM $4.92 billion 57.51 $904.00 million $0.97 273.09 NVIDIA has higher revenue and earnings than ARM. NVIDIA is trading at a lower price-to-earnings ratio than ARM, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility NVIDIA has a beta of 2.22, meaning that its share price is 122% more volatile than the S&P 500. Comparatively, ARM has a beta of 3.89, meaning that its share price is 289% more volatile than the S&P 500.

Summary NVIDIA beats ARM on 12 of the 15 factors compared between the two stocks.

About NVIDIA (Get Free Report)

NVIDIA Corporation provides graphics and compute and networking solutions in the United States, Taiwan, China, Hong Kong, and internationally. The Graphics segment offers GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro/NVIDIA RTX GPUs for enterprise workstation graphics; virtual GPU or vGPU software for cloud-based visual and virtual computing; automotive platforms for infotainment systems; and Omniverse software for building and operating metaverse and 3D internet applications. The Compute & Networking segment comprises Data Center computing platforms and end-to-end networking platforms, including Quantum for InfiniBand and Spectrum for Ethernet; NVIDIA DRIVE automated-driving platform and automotive development agreements; Jetson robotics and other embedded platforms; NVIDIA AI Enterprise and other software; and DGX Cloud software and services. The company's products are used in gaming, professional visualization, data center, and automotive markets. It sells its products to original equipment manufacturers, original device manufacturers, system integrators and distributors, independent software vendors, cloud service providers, consumer internet companies, add-in board manufacturers, distributors, automotive manufacturers and tier-1 automotive suppliers, and other ecosystem participants. NVIDIA Corporation was incorporated in 1993 and is headquartered in Santa Clara, California.

About ARM (Get Free Report)

Arm Holdings Plc engages in the licensing, marketing, research, and development of microprocessors, systems IP, graphics processing units, physical IP and associated systems IP, software, and tools. It operates through the following geographical segments: United Kingdom, United States, and Other Countries. The company was founded on November 12, 1990 and is headquartered in Cambridge, the United Kingdom.

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Shares of Arm Holdings (ARM +8.57%) jumped on Thursday after CEO Rene Haas said he believes the semiconductor designer is on track to generate $2 billion from its new artificial intelligence (AI) chip.

Image source: The Motley Fool.

Securing supply Arm's new AI chip has received a strong customer response. So much so that the chipmaker has struggled to produce enough of them. It's a good problem to have, but it's weighed on Arm's stock price nonetheless.

Yet that might be about to change.

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During an interview with CNBC's Jim Cramer on Wednesday, Haas said supply constraints were easing for its Arm's new AGI CPU data center chip.

Back in May, Haas pegged customer demand for the chip at $2 billion. Yet ARM guided for only $1 billion in revenue due to supply shortages.

Now, however, Haas is more confident that Arm can satisfy that $2 billion in demand.

"We're feeling good about it," Haas said. "We're feeling really good about it."

Entering the AI CPU arena Arm has a lot riding on its new chip. The semiconductor leader has long licensed its architectures to other chipmakers. The AGI CPU marks Arm's first attempt at marketing its own fully developed chip.

The AI central processor market is a massive opportunity. One that's set to grow roughly fivefold to $170 billion by 2030, according to Bank of America.

So, any positive news regarding the success of Arm's AGI CPU is likely to be met by cheers from investors.

Bank of America is an advertising partner of Motley Fool Money. Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Arm Holdings. The Motley Fool has a disclosure policy.