Should you buy Arm Holdings stock? (February 2024)

ARM Holdings stock analysis. Ticker: $ARM

Chip designer Arm Holdings reported earnings last week and the stock soared over 60% taking the market cap to 121 billion dollars. Shares are now up almost 150% since October.

Based in the UK, ARM makes money from license fees and royalties for its CPU processors. The recent boom in Artificial intelligence is causing strong demand for ARM’s designs with total revenue in the latest quarter rising 14% to 824 million.

The company has now reported 2.9 billion of revenue over the last 12 months, 240 million of ebitda and 720 million of free cash flow. Stock based compensation, however, is high at 900 million and net income is low at only 85 million. So ARM looks incredibly expensive at 41 times revenue and 165 times free cash flow. Even adjusted earnings which are estimated at $1.22 for the full year leads to a sky high PE of 94.

That valuation only makes sense if ARM can back it up with spectacular growth and there’s no doubt that the business can grow significantly in the future. Its chips are used in nearly every smartphone and ARM will continue to benefit from the boom in AI. ARM’s Cortex-XR, for example, is enabling generative AI and large language models on the latest mobile devices. The company can also grow market share in cloud computing and self-driving.

#stocks #investing #armstock #3mb

[mirorashev]

Always relevant and concise! Thank you!

[hummit]

Thank you! Excellent clear breakdown of stock prospect or lack of in this

[GeneralMerchandiser-rv]

If ever Nvidia does show an interest in ARM again some day, ARM price will explode.

[scotchandstocks]

Im shorting the stock! :D i cant be the only one that sees the softbank position as a negative catalyst!

[KenjiEspresso]

I bet you are right! Well I bought a share today after selling off NVDA. 😂 I don’t know what I’m doing but I’m making money 😂 Probably losing here then. Hopefully a small amount.