New Arm Holdings Price Target After Firm Reveals First-Ever AI Chip
The firm now seems poised to compete with heavyweights in the space like Nvidia.
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The American Depositary Shares (ADSs) of Arm Holdings (ARM) are hot as heck on Wednesday morning. Why? The Cambridge, England chip designer revealed on Tuesday afternoon its first-ever internal chip, the new AGI CPU.
This is a custom-designed central processing unit aimed at supporting agentic AI workloads.
The chip is said to deliver twice the performance of the traditional x86 platforms regularly sold by both Intel (INTC) and Advanced Micro Devices (AMD) , the two firms seen as industry leaders in CPU design.
The AGI CPU was developed in collaboration with Meta Platforms (META) , and will be deployed not only by Meta, but by OpenAI as well as a number of key AI firms. The chips will be manufactured by Taiwan Semiconductor (TSM) .
Very interestingly, Arm's business model for many years has been to design and then license chips or instruction sets for chip design to its customers and get paid for royalties on processors then manufactured using those instructions. Arm is now competing against CPU leaders Intel and AMD, but ultimately firms such as Amazon (AMZN) , Alphabet (GOOGL) and Microsoft (MSFT) , which have used Arm designed to create in-house semiconductors. This even puts the firm in competition with AI design king Nvidia (NVDA) now that the Jensen Huang led firm is designing GPUs, CPUs and much more.
The Deal
The shift in Arm's business model is quite significant, not just the move to creating fully developed server chips, but also in the revenue projection provided. CEO Rene Haas has forecast that this new chip will generate roughly $15 billion in annual revenue by 2031, with the firm's total revenue reaching $25 billion and earnings per share reaching $9.00.
For comparison's sake, Wall Street sees, for the current full-year, Arm earning $1.76 per share on revenue of roughly $4.9 billion, so this guidance is a big deal. This means that, if correct, while sales will increase rapidly, margins will rise at an even more torrid pace.
The Chart
Readers will note that ARM had broken out of two patterns of bullish reversal in early 2026. There is the falling wedge that formed from late October into early February. Then there is the double bottom at the nadir of that wedge that developed from January into February. The double bottom created a $134 pivot. My model would place a $167 target on ARM based on that pivot alone.
However, the 200-day SMA at $138 has become the new pivot as that is where many portfolio managers are forced to make decisions concerning exposure. These managers are likely adding to existing positions on Wednesday, chasing the stock and along with existing shorts (10.6% of the float), creating an intraday high that could present as resistance before the stock can move on beyond Wednesday morning's surge.
Looking at the indicators, relative strength is quite robust and has reached into technically overbought territory. The daily MACD is about as bullish looking as MACDs get. The histogram of the nine-day EMA, the 12-day EMA and the 26-day EMA are all in positive territory and rising. On top of that, the 12-day line is running above the 26-day line and pulling away. I would be fine with initiating ARM on any pullback that comes close to testing that 200-day SMA from above.
Arm Holding (ARM)
Target Price: $173
Pivot: 200-day SMA (currently $138)
Add: Down to 200-day SMA
Panic: Loss of 200-day SMA
Related: Emerging Market Selloff Shows Flashes of 2008 Financial Crisis
At the time of publication, Guilfoyle had no positions in any securities mentioned.
