ARM
Note: This is a daily stock update and the information stands true as of 28/02/25, 09:00 CET.
Company Update:
ARM's flexible access licenses have increased from 204 in FY 23 to 269 by Q2 FY 25 and ARM's Total Access licenses have increased from 31 in FY 24 to 39 by Q2 FY 25. Market share gains in datacenter business and royalty rates increasing as customers shift from v7 to v8 and v9 architecture should see sales for the next three grow at a healthy rate of around 20% while the EPS should see more growth as the business becomes bigger.
Expert Opinion:
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Company Update:
ARM's flexible access licenses have increased from 204 in FY 23 to 269 by Q2 FY 25 and ARM's Total Access licenses have increased from 31 in FY 24 to 39 by Q2 FY 25. Market share gains in datacenter business and royalty rates increasing as customers shift from v7 to v8 and v9 architecture should see sales for the next three grow at a healthy rate of around 20% while the EPS should see more growth as the business becomes bigger.
Expert Opinion:
ARM is a dominant leader in semiconductor compute architecture, with a vast developer ecosystem. Currently, it is one of only three main instruction set architectures (ISAs), alongside x86 and RISC-V. The group has a more than 95% market share in smartphones that is here to stay and we expect ARM to have very good sales growth of around 20% for at least the next three years while also improving its bottom line.
However, we believe that the share price has run ahead of its expectation with a FY 25 P/E ratio of 198 and from a risk-reward perspective, we believe it’s better to be on the sidelines. We have a sell rating with a fair value around $66 per share, ie a 50% downside potential.
For daily updates, subscribe to our newsletter and for detailed information, reach out to us at sales@alphavalue.eu
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