ARM Stock Forecast & Price Target

Arm Holdings is projected to grow its revenue at a robust rate of 24% annually, reaching approximately $3.99 billion by 2025, with earnings per share expected to increase by about 345% year-on-year to $1.60. The company's fourth-quarter outlook indicates a substantial 32% annual revenue increase, driven by a 60% growth in its licensing business and a 9% rise in royalties, supported by the ongoing adoption of its v9 architecture. Additionally, the December quarter saw royalty revenue grow 23% year-on-year, reflecting strong demand for Arm's newer technologies, particularly in flagship smartphones from major manufacturers like Oppo and Vivo.

ARM Holdings reported a slight decline in remaining performance obligations (RPO), falling from $2.4 billion to $2.3 billion, indicating a potential slowdown in revenue streams. The company anticipates a decrease in royalty revenues attributed to smartphone seasonality and a pullback in IoT revenues, despite some offset from record licensing revenues tied to larger renewals. Additionally, ARMv9's stagnant contribution to total revenue, remaining at 25% for three consecutive quarters, suggests potential challenges in profitability and growth, further highlighting the risks associated with its revenue exposure.