Arm stock is advised to buy by 70% of Wall Street analysts. There have never been so many "bulls" before

The share of bullish recommendations on Arm Holdings shares reached a record 70% after it unveiled its own chip on March 24, MarketWatch writes. The company, which made its name licensing technology to semiconductor makers, will now begin selling its processors and has already guaranteed a pool of buyers.

Needham analyst Charles Shea on Thursday, March 26, raised his rating on shares of Arm from "hold" to "buy". Earlier, analysts Raymond James and HSBC improved their recommendations on the company's securities, with the latter raising the rating by two steps at once, MarketWatch notes.

As a result, the percentage of bullish valuations for Arm stock has reached 70%, an all-time high, according to FactSet data cited by MarketWatch.

The revisions come after the company announced the launch of its own CPU chip (a central processing unit focused on sequential tasks and general functioning of AI systems). This represents a shift in Arm's business model, which was previously based on licensing and royalties.

Arm's new position in the AI datacenter segment marks a tipping point, analyst Needham wrote. And the most important thing in this bet is the presence of customers including OpenAI, SAP, Cloudflare and, mainly, Meta.

Shi predicts that Arm will be able to take advantage of the "CPU renaissance" as data centers and the development of agent-based AI drive demand for such chips. That said, one of the key risks is that the company will have to compete with its own major customers - cloud players that are developing their own processors, such as Google and Amazon.

Still, the analyst said, the multi-year agreement with Meta partially protects Arm, and the complexity of the development will keep its customers from abandoning outside partners altogether.

"We've stayed on the sidelines at Arm for 2.5 years, but now we see that their series of risky bets are starting to work," Needham said in the note, as quoted by Investing.com. - These bold moves are set to disrupt the established industry landscape (which was one of the reasons for our caution in particular). They will transform Arm for the better in unexpected ways."

Arm shares were down 1.5% on Thursday, March 26, but looked better than the market amid a 2.4% drop in the Nasdaq Composite index. Since the beginning of the year, the company's capitalization has jumped 42%, with half of that growth coming in the last month.

Of the 43 analysts whose opinions are tracked by MarketWatch, 29 recommend Arm securities to buy, 12 - take a neutral position, and two - advise to sell. The average target price is $162.5, which means the potential for growth of 5% relative to the closing level of trading on March 26. Needham's target suggests a growth of almost 30%.

This article was AI-translated and verified by a human editor