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Arm Holdings (ARM - Free Report) , a Zacks Rank #1 (Strong Buy), develops and licenses central processing unit (CPU) products and related technologies. The British chip designer continues to benefit from underlying strength in semiconductor stocks. The company has enjoyed a strong showing since its U.S. IPO last year, with ARM stock recently surging to a new high. Shares are displaying relative strength as buying pressure accumulates in this market leader.
The company is part of the Zacks Technology Services industry group, which currently ranks in the top 35% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months. This industry is also showing several favorable characteristics:
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Arm Holdings offers microprocessors, systems intellectual property, graphics processing units, and other related software and services. Its products are used in various markets such as automotive, computing infrastructure, consumer technologies, and Internet of Things.
The company operates in the United States as well as international markets such as China, Taiwan, and South Korea. Arm Holdings was founded in 1990 and is headquartered in Cambridge, the United Kingdom.
Robust demand for products that run leading-edge artificial intelligence has boosted investor appetite for companies that produce the chips. Chip leader Nvidia recently disclosed a nearly $150 million stake in Arm Holdings in its first-ever 13F filing with the SEC.
Nvidia previously attempted to purchase ARM about two years ago in a blockbuster $80 billion deal, but the agreement turned sour after it hit antitrust issues. Arm Holdings was taken private by Japan’s SoftBank in 2016 before returning to the public stage last year.
Earnings Trends and Future Estimates
Since its September 2023 Nasdaq debut, Arm Holdings has established an impressive earnings history, surpassing earnings estimates in each of the last two quarters. Back in February, the company reported fiscal third-quarter earnings of $0.29/share, a 16% surprise over the $0.25/share consensus estimate.
Quarterly revenues of $824 million also beat projections by 7.69%. Consistently beating estimates is a recipe for success.
Analysts covering ARM are in agreement and have been raising their earnings estimates across the board. For the upcoming fiscal year, analysts bumped up earnings estimates by 9.42% in the past 60 days. The Zacks Consensus EPS Estimate now stands at $1.51/share, reflecting potential growth of 24.8% relative to the prior year. Revenues are projected to climb 24.1% to $3.91 billion.
Image Source: Zacks Investment Research
Let’s Get Technical
ARM shares have advanced more than 180% in the past five months. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Image Source: StockCharts
Notice how the 50-day (blue line) moving average is sloping up. The stock has been making a series of new highs. With both strong fundamental and technical indicators, ARM is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Arm Holdings has recently witnessed positive revisions. As long as this trend remains intact (and ARM continues to deliver earnings beats), the stock will likely continue its bullish run this year.
Bottom Line
The future looks bright for this highly-ranked, leading stock. The company has shown an ability to adapt to the ever-changing technological landscape, which puts it in a strong position moving forward.
Backed by a leading industry group and impressive history of earnings beats, it’s not difficult to see why ARM stock is a compelling investment. An appealing technical trend along with robust fundamentals paint a bullish picture for Arm Holdings.
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Bull of the Day: Arm Holdings (ARM)
Arm Holdings (ARM - Free Report) , a Zacks Rank #1 (Strong Buy), develops and licenses central processing unit (CPU) products and related technologies. The British chip designer continues to benefit from underlying strength in semiconductor stocks. The company has enjoyed a strong showing since its U.S. IPO last year, with ARM stock recently surging to a new high. Shares are displaying relative strength as buying pressure accumulates in this market leader.
The company is part of the Zacks Technology Services industry group, which currently ranks in the top 35% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months. This industry is also showing several favorable characteristics:
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Arm Holdings offers microprocessors, systems intellectual property, graphics processing units, and other related software and services. Its products are used in various markets such as automotive, computing infrastructure, consumer technologies, and Internet of Things.
The company operates in the United States as well as international markets such as China, Taiwan, and South Korea. Arm Holdings was founded in 1990 and is headquartered in Cambridge, the United Kingdom.
Robust demand for products that run leading-edge artificial intelligence has boosted investor appetite for companies that produce the chips. Chip leader Nvidia recently disclosed a nearly $150 million stake in Arm Holdings in its first-ever 13F filing with the SEC.
Nvidia previously attempted to purchase ARM about two years ago in a blockbuster $80 billion deal, but the agreement turned sour after it hit antitrust issues. Arm Holdings was taken private by Japan’s SoftBank in 2016 before returning to the public stage last year.
Earnings Trends and Future Estimates
Since its September 2023 Nasdaq debut, Arm Holdings has established an impressive earnings history, surpassing earnings estimates in each of the last two quarters. Back in February, the company reported fiscal third-quarter earnings of $0.29/share, a 16% surprise over the $0.25/share consensus estimate.
Quarterly revenues of $824 million also beat projections by 7.69%. Consistently beating estimates is a recipe for success.
Analysts covering ARM are in agreement and have been raising their earnings estimates across the board. For the upcoming fiscal year, analysts bumped up earnings estimates by 9.42% in the past 60 days. The Zacks Consensus EPS Estimate now stands at $1.51/share, reflecting potential growth of 24.8% relative to the prior year. Revenues are projected to climb 24.1% to $3.91 billion.
Image Source: Zacks Investment Research
Let’s Get Technical
ARM shares have advanced more than 180% in the past five months. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Image Source: StockCharts
Notice how the 50-day (blue line) moving average is sloping up. The stock has been making a series of new highs. With both strong fundamental and technical indicators, ARM is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Arm Holdings has recently witnessed positive revisions. As long as this trend remains intact (and ARM continues to deliver earnings beats), the stock will likely continue its bullish run this year.
Bottom Line
The future looks bright for this highly-ranked, leading stock. The company has shown an ability to adapt to the ever-changing technological landscape, which puts it in a strong position moving forward.
Backed by a leading industry group and impressive history of earnings beats, it’s not difficult to see why ARM stock is a compelling investment. An appealing technical trend along with robust fundamentals paint a bullish picture for Arm Holdings.