From 24/7 Wall St. · Vandita Jadeja · · 1m
AI Chip Race Shifts Focus
Arm's new AI chips could redefine computing power despite stock drop.
In brief
Arm's new AI chips could redefine computing power despite stock drop. Arm Holdings now sells AI chips for data centers, driving potential $400 stock price despite recent share decline. Originally reported by 24/7 Wall St..
Arm's New AI Chip Entry
Arm now sells its own AI chip for data centers, shifting from royalty model to direct silicon revenue.
“Arm Gave Back a Third in a Month Despite Beating on Revenue”
Stock Performance Shift
Shares fell 33.8% over the past month but remain up 86.23% year to date.
Revenue Growth
Q1 2027 revenue of $1.289 billion beat consensus at $1.267 billion with 22.4% year-over-year growth.
Bull Case for $400
Analysts project $407.95 price target as AI chip demand exceeds $2 billion against $1 billion supply opportunity.
Margin Risks
Trades at 239x P/E with first-generation ai chip gross margins guided to high 30s, far below 92.48% corporate margin.
Peer Comparison
NVIDIA trades at 42x earnings while Arm trades at 239x, despite similar ai infrastructure growth.
The short version
Arm Holdings now sells AI chips for data centers, driving potential $400 stock price despite recent share decline.
