ARM Stock Forecast & Price Target

Arm Holdings is projected to achieve a robust 24% annual revenue growth, reaching approximately $3.99 billion by 2025, with estimated earnings per share (EPS) soaring by about 345% year-over-year to $1.60. The company's fourth-quarter outlook indicates a significant 32% annual increase in revenue, supported by a 9% growth in royalty income and a remarkable 60% surge in its licensing business, as it finalizes numerous substantial deals. Additionally, the December quarter demonstrated a record 23% year-on-year growth in royalty revenue, driven by the successful adoption of its newer v9 architecture, highlighting Arm’s capacity to outperform the sluggish expansion in the broader wireless market.

ARM Holdings reported a decline in remaining performance obligations (RPO), decreasing from $2.4 billion to $2.3 billion, signaling potential revenue weakness. The company anticipates a dip in royalty revenues due to seasonal fluctuations in smartphone demand and a slowdown in IoT revenues, which may not be fully offset by expected increases in licensing revenue from major renewals. Additionally, stagnation in Armv9's revenue contribution, remaining unchanged at 25% for three consecutive quarters, coupled with challenges in a saturated mobile market characterized by elongated replacement cycles, indicates serious risks to ARM Holdings' profitability and growth prospects.