Upside case
Bull case
$188-9.8%
The bull case prices ARM at 107x on FY1 earnings, assuming continued execution and no meaningful deceleration in the core business.
Analysis OverviewBuyUpdated May 1, 2026
Arm Holdings plc American Depositary Shares (ARM) Stock Analysis
Wall Street verdict, consensus price target, and analyst rating breakdown — everything needed to frame the risk/reward at today's price.
Analyst consensus
Buy
Covering
27
analysts
20 bullish · 2 bearish · 27 covering ARM
Strong Buy
0
Buy
20
Hold
5
Sell
2
Strong Sell
0
Consensus Target
$164
-21.6% vs today
Scenario Range
$18 – $188
Model bear to bull value window
Coverage
27
Published analyst ratings
Valuation Context
119.1x
Forward P/E · Market cap $220.7B
ARM price targets
Three scenarios for where ARM stock could go
Current
~$209
Confidence
55 / 100
Updated
May 1, 2026
Where we are now
Current · $209
Bear
$18
Base
$126
Bull
$188
Market caseClosest to today
Base case
$126-39.5%
At 72x on FY1 earnings, the base case reflects a reasonable but not stretched valuation. It prices in continued growth without assuming an exceptional setup.
Stress case
Bear case
$18-91.5%
If investor confidence fades or macro conditions deteriorate, a 109x multiple contraction could push ARM down roughly 92% from where it trades now.
Not financial advice. Model confidence reflects internal scenario assumptions, not a guarantee of returns. Past performance does not predict future results.
Arm Holdings plc American Depositary Shares
ARM · NASDAQTechnologySemiconductorsMarch year-end
Arm Holdings designs and licenses semiconductor intellectual property — particularly CPU architectures — that power billions of chips worldwide. It generates revenue primarily through upfront licensing fees for its IP blueprints and ongoing royalty payments — typically a small percentage of chip value — from manufacturers who use its designs in their products. The company's moat stems from its ubiquitous architecture that has become the industry standard for mobile and embedded devices, creating a vast ecosystem that's difficult for competitors to displace.
Market Cap
$220.7B
Revenue TTM
$4.4B
Net Income TTM
$830M
Net Margin
18.8%
ARM Revenue and Earnings Performance
Quarterly beat-or-miss track record against analyst estimates, plus forward revenue and EPS outlook for the next two fiscal years.
EPS Beat Rate
80%Exceptional
12 quarters tracked
Revenue Beat Rate
80%Exceptional
vs consensus estimates
Avg EPS Surprise
+0.7%
above Street consensus
Beat / Miss Record
BeatMissLeft = EPS · Right = Revenue
Q2 2025
Q3 2025
Q4 2025
Q1 2026
Last 4 Quarters
EPS beats: 3 of 4Q2 2025
EPS
$0.55/$0.53
Revenue
$1.2B/$1.1B
Q3 2025
EPS
$0.35/$0.35
Revenue
$1.1B/$1.1B
Q4 2025
EPS
$0.15/$0.33
Revenue
$1.1B/$1.1B
Q1 2026
EPS
$0.43/$0.41
Revenue
$1.2B/$1.2B
| Quarter | EPS (Actual / Est) | EPS Surprise | Revenue (Actual / Est) | Rev Surprise |
|---|---|---|---|---|
| Q2 2025 | $0.55/$0.53 | +4.8% | $1.2B/$1.1B | +16.9% |
| Q3 2025 | $0.35/$0.35 | +0.3% | $1.1B/$1.1B | -0.8% |
| Q4 2025 | $0.15/$0.33 | -54.4% | $1.1B/$1.1B | +1.6% |
| Q1 2026 | $0.43/$0.41 | +4.9% | $1.2B/$1.2B | +1.2% |
FY1–FY2 Estimates
Revenue Outlook
FY1
$5.0B
+14.3% YoY
FY2
$6.1B
+21.9% YoY
EPS Outlook
FY1
$1.45
+86.9% YoY
FY2
$1.58
+8.8% YoY
Trailing FCF (TTM)$1.1B
FCF Margin: 25.9%
Next Earnings
May 6, 2026
Expected EPS
$0.58
Expected Revenue
$1.5B
ARM beat EPS estimates in 3 of 4 tracked quarters. A strong delivery record supports forward estimate credibility.
ARM Revenue Breakdown by Segment
Product and geographic revenue mix from the latest annual disclosure, with year-over-year growth by segment.
Latest disclosure
FY 2025
Total disclosed revenue $4.0B
Product Mix
Latest annual revenue by segment or product family
Royalty
54.1%
+20.3% YoY
Tap, hover, or focus a slice to inspect segment detail.
Geographic Mix
Latest annual revenue by reported region
UNITED STATES
42.8%
+21.4% YoY
Tap, hover, or focus a slice to inspect segment detail.
Royalty is the largest disclosed segment at 54.1% of FY 2025 revenue, up 20.3% YoY.
UNITED STATES is the largest reported region at 42.8%, up 21.4% YoY.
ARM Valuation Snapshot
Current multiples compared to the S&P 500, the company's sector, and its own five-year average.
Relative Value Signal
Significantly Overvalued
Fair value est. $88 — implies -58.5% from today's price.
Premium to Fair Value
58.5%
above fair value
Deep DiscountFair ValueVery Expensive
vs S&P 500 Trailing P/E
ARM
278.5x
vs
S&P 500
25.1x
+1009% premium
vs Technology Trailing P/E
ARM
278.5x
vs
Technology
26.7x
+942% premium
vs ARM 5Y Avg P/E
Today
278.5x
vs
5Y Average
142.4x
+96% premium
Forward PE
119.1x
S&P 500
19.1x
+524%
Technology
22.1x
+439%
5Y Avg
—
—
Trailing PE
278.5x
S&P 500
25.1x
+1009%
Technology
26.7x
+942%
5Y Avg
142.4x
+96%
PEG Ratio
—
S&P 500
1.72x
—
Technology
1.52x
—
5Y Avg
—
—
EV/EBITDA
216.9x
S&P 500
15.2x
+1325%
Technology
17.5x
+1142%
5Y Avg
—
—
Price/FCF
1240.1x
S&P 500
21.1x
+5781%
Technology
19.5x
+6253%
5Y Avg
137.9x
+800%
Price/Sales
55.1x
S&P 500
3.1x
+1662%
Technology
2.4x
+2155%
5Y Avg
34.4x
+60%
Dividend Yield
—
S&P 500
1.87%
—
Technology
1.16%
—
5Y Avg
—
—
| Metric | ARM | S&P 500 | Technology | 5Y Avg ARM |
|---|---|---|---|---|
| Forward PE | 119.1x | 19.1x+524% | 22.1x+439% | — |
| Trailing PE | 278.5x | 25.1x+1009% | 26.7x+942% | 142.4x+96% |
| PEG Ratio | — | 1.72x | 1.52x | — |
| EV/EBITDA | 216.9x | 15.2x+1325% | 17.5x+1142% | — |
| Price/FCF | 1240.1x | 21.1x+5781% | 19.5x+6253% | 137.9x+800% |
| Price/Sales | 55.1x | 3.1x+1662% | 2.4x+2155% | 34.4x+60% |
| Dividend Yield | — | 1.87% | 1.16% | — |
ARM trades above S&P 500 benchmarks on 5 of 5 measured multiples — commands a broad premium across most valuation dimensions.
Forward P/E and PEG reflect analyst consensus estimates. Historical averages use trailing ratios where forward data is unavailable.S&P 500 and sector benchmarks both use trailing median P/E — similar readings indicate the broader index and sector are priced alike.
Open valuation toolARM Financial Health
Verdict
Strong
ARM generates $1.1B in free cash flow at a 25.9% margin — 14.2% ROIC signals a durable competitive advantage.
Cash Engine
Revenue, margins, and cash generation
Revenue (TTM)
Trailing-twelve-month sales base
$4.4B
Revenue Growth
TTM vs prior year
+24.8%
Gross Margin
Gross profit as a share of revenue
95.6%
Operating Margin
Operating income divided by revenue
19.4%
Net Margin
Net income divided by revenue
18.8%
EPS (TTM)
Diluted earnings per share, trailing twelve months
$0.78
Free Cash Flow (TTM)
Cash generation after capex
$1.1B
FCF Margin
FCF as share of revenue — the primary cash quality signal
25.9%
Capital Quality
ROIC, leverage, and debt serviceability
ROIC
Return on invested capital — primary competitive quality signal
14.2%
ROA
Return on assets, trailing twelve months
8.5%
Cash & Equivalents
Liquid assets on the balance sheet
$2.1B
Net Cash
Cash exceeds total debt — no net leverage
$1.7B
Debt Serviceability
Net debt as a multiple of annual free cash flow
Net cash ✓
ROE
Return on equity, trailing twelve months
11.2%
Shareholder Returns
How capital is returned to owners
Total shareholder yield
0.0%
Dividend
—
Buyback
0.0%
Share Repurchases
Trailing buyback outflow — dollar magnitude of capital returned
$0
Dividend / Share
Annualized trailing dividend per share
—
Payout Ratio
Share of earnings distributed as dividends
—
Shares Outstanding
Current diluted share count
1.1B
All figures from the trailing twelve months. ROIC uses invested capital (equity + net debt).
Open full ratios pageARM Stock Risk Factors
Key factors that could pressure the stock price, compress the multiple, or weigh on future results.
AI analysis · updated April 29, 2026
High Risk
Stock Price Volatility
The market price of ARM's American Depositary Shares (ADSs) can be highly volatile, influenced by broader market and industry trends. This volatility may lead to declines in share price, potentially preventing investors from selling at or above their purchase price.
High Risk
Lack of Dividends
ARM does not plan to pay cash dividends in the foreseeable future, which means investors rely solely on capital appreciation for returns. This lack of dividends increases the risk of not receiving a return on investment.
High Risk
Reliance on Key Customers
A significant portion of ARM's revenue is derived from a limited number of customers, which heightens the risk associated with any adverse changes in these relationships. Loss of a key customer could substantially impact revenue.
High Risk
New Business Model Transformation
ARM's strategic shift to develop and sell its own chips instead of solely licensing designs represents a significant change. This transformation requires substantial investment and may reduce short-term profits, raising concerns among investors.
Medium
Intense Competition
ARM faces intense competition in the semiconductor market, which could lead to a loss of market share. Competitors may introduce superior products or services, further challenging ARM's market position.
Medium
China Market Exposure
ARM's revenue concentration from the PRC market exposes it to economic and political risks, particularly amid geopolitical tensions. The company's relationship with Arm China is crucial for accessing this significant market.
Medium
Execution Risk in New Ventures
ARM's entry into the merchant chip market with its AGI CPU is a departure from its traditional IP licensing model. While it has secured customers like Meta and OpenAI, the success of this venture carries inherent risks that could affect financial performance.
Lower
Intellectual Property (IP) Protection
Failure to maintain and protect its intellectual property rights could impair ARM's ability to safeguard its proprietary products. The costs associated with litigation to defend these rights could adversely affect its financial results.
These are risk mechanisms, not predictions. The key question is which would force a cut to earnings estimates or a lower multiple than the market currently prices in.
Why ARM Stock Could Outperform
Structural drivers behind the upside case and why the stock could outperform over the next 12 months.
AI analysis · updated April 29, 2026
AI and Data Center Growth
ARM's technology is fundamental to the increasing demand for computation driven by the AI explosion. Hyperscale cloud providers are increasingly deploying ARM-based CPUs, and data center royalties have seen significant growth, with the introduction of the AGI CPU expected to unlock substantial new revenue potential.
Royalty-Based Business Model
ARM operates a high-margin, royalty-based business model that scales efficiently with global chip volumes and requires minimal capital investment. This model offers strong operating leverage, particularly advantageous as AI workloads surge.
Expanding Ecosystem and Developer Base
ARM benefits from a vast software and developer ecosystem, with a significant portion of the world's developers already on its platform. This strong ecosystem helps to keep customers tied to ARM's platform and positions it favorably against competitors.
Advanced Architectures and Products
The launch of Armv9, the Compute Subsystem (CSS), and the upcoming AGI CPU are seen as significant catalysts. These advancements are expected to enhance ARM's position in premium silicon economics and drive future revenue growth.
Diversification and Reduced Reliance on Smartphones
While historically driven by smartphones, ARM is successfully diversifying its revenue streams, with data centers becoming a major growth area. This shift reduces dependence on the cyclical mobile market.
A real bull case compounds — each driver matters most when it strengthens margins, supports capital returns, and keeps the company above the market's minimum growth bar simultaneously.
ARM Stock Price Performance
52-week range context and price returns across multiple time horizons. Dividend contribution is shown separately in the Capital Return section.
Current Price
$208.84
52W Range Position
79%
52-Week Range
Current price plotted between the 52-week low and high.
52-Week Low
$100.02
+108.8% from the low
52-Week High
$237.68
-12.1% from the high
1 Month
+40.38%
3 Month
+88.35%
YTD
+82.0%
1 Year
+71.2%
3Y CAGR
+50.9%
5Y CAGR
+28.0%
10Y CAGR
+13.1%
Range context matters because valuation compression and earnings misses rarely hit from the same starting point. A stock already far below its high can still fall, but it is no longer carrying the same embedded optimism as one pressing a fresh peak.
ARM vs Peers
Valuation, growth, and margin comparison against the closest publicly traded peers for this company.
Peer Set
Accurate peer set
Forward PE
119.1x
vs 44.5x median
+167% above peer median
Revenue Growth
+14.3%
vs +6.3% median
+128% above peer median
Net Margin
18.8%
vs 13.8% median
+37% above peer median
| Company | Mkt Cap | Fwd PE | Rev Grw | Margin | Rating | Upside |
|---|---|---|---|---|---|---|
ARM ARM Arm Holdings plc American Depositary Shares | $220.7B | 119.1x | +14.3% | 18.8% | Buy | -21.6% |
CEV CEVA CEVA, Inc. | $810M | 67.3x | +6.3% | -10.5% | Buy | -13.0% |
SNP SNPS Synopsys, Inc. | $96.3B | 34.8x | +17.7% | 13.8% | Buy | +8.1% |
CDN CDNS Cadence Design Systems, Inc. | $97.6B | 44.5x | +15.0% | 20.9% | Buy | +4.9% |
QCO QCOM QUALCOMM Incorporated | $196.6B | 17.4x | +1.4% | 22.3% | Hold | -6.2% |
INT INTC Intel Corporation | $543.2B | 103.7x | +3.9% | -5.9% | Hold | -28.7% |
This peer comparison reflects companies with similar business models, product lines, or market positioning, supplemented by industry grouping when direct matches are limited.
FAQ
7 questionsARM Investor Questions
Common questions answered from live analyst data and company financials.
01Is Arm Holdings plc American Depositary Shares (ARM) stock a buy or sell in 2026?
Arm Holdings plc American Depositary Shares (ARM) is rated Buy by Wall Street analysts as of 2026. Of 27 analysts covering the stock, 20 rate it Buy or Strong Buy, 5 rate it Hold, and 2 rate it Sell or Strong Sell. The consensus 12-month price target is $164, implying -21.6% from the current price of $209. The bear case scenario is $18 and the bull case is $188.
02What is the ARM stock price target for 2026?
The Wall Street consensus price target for ARM is $164 based on 27 analyst estimates. The high-end target is $210 (+0.6% from today), and the low-end target is $120 (-42.5%). The base case model target is $126.
03Is Arm Holdings plc American Depositary Shares (ARM) stock overvalued in 2026?
ARM trades at 119.1x times forward earnings. The stock trades at a notable premium to the broad market, which is typical for businesses with strong free cash flow and above-average growth expectations. Based on current multiples versus the peer group, the relative model signals significantly overvalued. Whether the stock is over or undervalued ultimately depends on whether consensus earnings estimates are achievable.
04What are the main risks for Arm Holdings plc American Depositary Shares (ARM) stock in 2026?
The primary risks for ARM in 2026 are: (1) Stock Price Volatility — The market price of ARM's American Depositary Shares (ADSs) can be highly volatile, influenced by broader market and industry trends. (2) Lack of Dividends — ARM does not plan to pay cash dividends in the foreseeable future, which means investors rely solely on capital appreciation for returns. (3) Reliance on Key Customers — A significant portion of ARM's revenue is derived from a limited number of customers, which heightens the risk associated with any adverse changes in these relationships. Each factor has the potential to pressure earnings or compress the stock's valuation multiple.
05What is Arm Holdings plc American Depositary Shares's revenue and earnings forecast?
Analyst consensus estimates ARM will report consensus revenue of $5.0B (+14.3% year-over-year) and EPS of $1.45 (+86.9% year-over-year) for the upcoming fiscal year. The following year, analysts project $6.1B in revenue.
06When does Arm Holdings plc American Depositary Shares (ARM) report its next earnings?
Arm Holdings plc American Depositary Shares is expected to report its next earnings on approximately 2026-05-06. Consensus expects EPS of $0.58 and revenue of $1.5B. Over recent quarters, ARM has beaten EPS estimates 80% of the time.
07How much free cash flow does Arm Holdings plc American Depositary Shares generate?
Arm Holdings plc American Depositary Shares (ARM) generated $1.1B in free cash flow over the trailing twelve months — a free cash flow margin of 25.9%. ARM returns capital to shareholders through and share repurchases ($0 TTM).