Arm Holdings (NASDAQ:ARM) shares rose more than 4% intra-day today after Goldman Sachs analysts raised their price target for the company to $143 from $110, while maintaining a Buy rating on the stock.
The analysts expressed increased confidence that Arm will continue to be the preferred architecture for most product categories at the Edge and increasingly in Data Centers. In a world with growing power constraints, they anticipate Arm will gain market share in Server CPUs due to strong momentum with existing customers like AWS (Graviton) and Nvidia (Grace), as well as early success with new customers such as Microsoft (Cobalt) and Google (Axion).
The analysts’ positive investment outlook is based on the expected proliferation of Arm-based processors across various cloud platforms and the transition from the v8 to v9 architecture, which involves higher royalty rates. This transition is projected to drive sustained margin expansion and earnings growth.
The analysts forecast a three-year revenue and non-GAAP EPS (excluding SBC) compound annual growth rates (CAGR) of approximately 24% and 30% through 2027, respectively, which significantly exceed the median growth rates within the Semiconductor and Semiconductor Capital Equipment sectors.