Arm Holdings Makes a Massive Strategy Change. It Could Be Brilliant, or Blow Up in Investors' Faces.
Arm Holdings (NASDAQ: ARM) has been a strong stock to own since it went public in September 2023. After hitting the market at $51 per share, Arm's stock has since tripled in price to $159 as of this writing. Although Arm's valuation looks sky-high at 99 times forward earnings, investors are taking an optimistic view, likely in anticipation of Arm-based chips taking market share in data center computing. Known for their power efficiency, Arm-based chips have long dominated in smartphones. Yet with power concerns coming to the fore as AI data centers require massive amounts of electricity, Arm-based chips are now penetrating this high-growth vertical. But Arm executives apparently don't think licensing its architecture is enough anymore. Reports are that Arm is about to embark on a huge strategy change -- and it could be an extremely risky bet.Continue reading
Arm Holdings (NASDAQ: ARM) has been a strong stock to own since it went public in September 2023. After hitting the market at $51 per share, Arm's stock has since tripled in price to $159 as of this writing.
Although Arm's valuation looks sky-high at 99 times forward earnings, investors are taking an optimistic view, likely in anticipation of Arm-based chips taking market share in data center computing. Known for their power efficiency, Arm-based chips have long dominated in smartphones. Yet with power concerns coming to the fore as AI data centers require massive amounts of electricity, Arm-based chips are now penetrating this high-growth vertical.
But Arm executives apparently don't think licensing its architecture is enough anymore. Reports are that Arm is about to embark on a huge strategy change -- and it could be an extremely risky bet.
