Arm draws higher price targets to $475 as AI CPUs gain traction

Arm Holdings shares slid 4% to $351.89 on Wednesday, extending a weekly decline to 19% as a broad tech rotation battered high-flying AI names.

"The real investor debate, in our view, is revenue potential for Arm's standalone CPU," Timothy Arcuri, analyst at UBS, said. He raised the firm's price target to $470 from $260, implying 33% upside, and maintained a Buy rating.

TD Cowen also lifted its target to $475 from $265, keeping a Buy rating, citing central processing units as a better long-term bet than graphics processing units as agentic AI evolves. Bank of America raised its target to $460 from $335 but reiterated a Neutral rating, with analyst Vivek Arya saying Arm at $420 is "fairly valued."

The upgrades center on Arm's push into full-blown chip production with internal CPUs designed for AI data centers. UBS projects that business will generate about $14 billion in revenue by 2030, though the company has said it won't become financially material until fiscal 2028.

Arm, which makes the instruction-set architecture that serves as the main alternative to Intel Corp.'s x86 standard, has expanded beyond its traditional licensing and royalty model — serving customers including Apple Inc., Nvidia Corp., Samsung Electronics Co. and Qualcomm Inc. — into designing and producing its own chips.

The stock remains up 227% this year and 127% over the past 12 months despite this week's pullback, according to Dow Jones Market Data. The selloff has pulled Arm about 16% below the $420 level that BofA considers fair value.

The divergence between near-term price action and bullish long-term analyst targets suggests elevated volatility ahead as the market weighs AI rotation against Arm's expanding product opportunity. Investors will watch for any updates on internal CPU customer wins and production timelines in coming quarters.

This article is for informational purposes only and does not constitute investment advice.