Arm Holdings (ARM) shares breached the $300 mark for the first time on Friday morning, continuing a remarkable rally that has pushed the British chip designer to the forefront of the AI semiconductor trade. The stock was trading at $300.89 as of 9:58 a.m. Eastern, up 0.9% on the day, according to MarketBeat data.
The surge reflects a broader shift on Wall Street, where investors are increasingly looking beyond graphics processing units (GPUs) to central processing units (CPUs) as AI workloads evolve. While GPUs powered the initial wave of generative AI training, CPUs are now seen as critical for coordinating multi-step tasks in AI agents, which are becoming more autonomous and complex.
Nvidia (NVDA) added fuel to this trend this week with its record quarterly results. The company reported revenue of $81.6 billion, up 85% year-over-year, and data-center revenue of $75.2 billion. CEO Jensen Huang declared that "Agentic AI has arrived," underscoring the growing importance of CPUs in AI infrastructure.
Arm does not compete directly with Nvidia like AMD or Intel. Instead, it licenses its processor designs and earns royalties when chips based on its technology are shipped. Wall Street views Nvidia's push into Arm-based CPUs as a potential royalty windfall for Arm, given the increasing adoption of its architecture in data centers.
Bernstein analyst David Dai initiated coverage of Arm with an Outperform rating and a $300 price target, arguing that the company is well-positioned as AI workloads shift from chatbot-style systems to autonomous agents. "Arm stands out in server CPUs given its unparalleled power efficiency," Dai wrote, according to Benzinga. The stock had already hit a new high on Thursday, touching $298.69 before closing up 16.16% at $298.23, following Bernstein's call and its forecast that Arm's profits could grow fivefold over four years.
Arm's own financial results provided a solid foundation for the rally. The company reported fiscal fourth-quarter revenue of $1.49 billion and full-year revenue of $4.92 billion. Licensing revenue in the quarter reached $819 million, while royalty revenue was $671 million, driven by cloud AI where data-center royalties more than doubled from a year earlier.
The bigger bet for Arm is its deeper push into data centers. The company disclosed that customer demand for its Arm AGI CPU, a data-center processor designed for AI-agent workloads, exceeded $2 billion across fiscal 2027 and fiscal 2028—more than double what it had previously indicated. Meta (META) is the lead partner and co-developer, while systems based on the chip are available from ASRock, Lenovo, Quanta, and Supermicro.
This has shifted how some investors view Arm. Dai framed the company as being at the center of a CPU "renaissance," with major cloud providers such as Alphabet's Google, Microsoft (MSFT), and Meta using Arm-based custom silicon to improve power efficiency and computing density.
The rally has also reshuffled the semiconductor leaderboard. Arm climbed 38% in three sessions and moved ahead of Micron to rank second in year-to-date performance among iShares Semiconductor ETF holdings, behind Intel, according to Benzinga.
However, there are risks. MarketBeat data shows Arm's average 12-month analyst price target at $208.79, well below the current price, even though the highest listed target is $300. Additionally, the stock's relative strength index is nearing overbought territory, a technical signal that can precede a pullback.
For now, the market is betting on a cleaner narrative: Nvidia's AI spending wave is spreading beyond GPUs, and Arm may collect more tolls as CPUs regain importance in data centers. That thesis still needs revenue—not just targets—to keep the stock above the line it just crossed.
