Arm rises after UBS initiated coverage at 'buy" on AI growth

MEDIATEK

25/11/2024 16:17

** U.S.-listed shares of Arm Holdings  ARM.O  up 3.4% at $140.67
Mon after UBS started coverage of British chip designer at
'buy', saying artificial intelligence (AI) set to ramp higher
** Brokerage set PT at $160, implying ~18% upside to stock's
close on Fri
** AI driving positive growth across all of Arm's key end
markets, UBS said in note late Fri, with data center
"particularly fertile ground as the customer base for its IP
licenses expands and cloud customers push for more power
optimized CPU architectures"
** Qualcomm  QCOM.O  and MediaTek  2454.TW /Nvidia  NVDA.O 
AI PC efforts should lead Arm to grow PC unit/rev share from
17%/17% in 2023 to 22%/24% in 2028, driving a 15% Arm PC royalty
CAGR, brokerage said
** Data center ramping even faster with hyperscalers' in-house
Arm processor efforts driving Arm server rev/unit share from
7%/5% in 2023 to 23%/16% in 2028, UBS said
** 38 brokerages cover ARM and recommendation breakdown is 23
"strong buy" or "buy", 12 "hold" and 3 "sell" or "strong sell"
ratings, per LSEG
** Median PT of $159 up from $137 a month ago
** With move on Mon, stock up 87% YTD vs Philadelphia chip
index's  .SOX  20% advance and Nasdaq 100's  .NDX  24% climb

 (Lance Tupper is a Reuters market analyst. The views expressed
are his own)
 ((lance.tupper@thomsonreuters.com
lance.tupper@tr.com 1-646-279-6380))