Arm's stock shoots to best day in a year as an Nvidia-like chapter may be starting

By Hannah Pedone

Arm could dominate the CPU market the way Nvidia has come to dominate the GPU market, an analyst says

Arm announced on Tuesday that it will sell its own CPU.

Arm Holdings could be on track for a Nvidia-like ascent, according to an analyst, as the company gets ready to sell its first chip.

Until now, Arm (ARM) has largely derived its revenue from royalties and from licensing its intellectual property to chip designers. But on Tuesday, the company announced the launch of its own central processing unit, which it says is meant to support agentic artificial intelligence.

While Arm's stock fell 1.4% on Tuesday after the announcement, it surged 16.4% in Wednesday trading as analysts weighed in on the implications of Arm's CPU efforts - both in terms of the company's narrative and its financial prospects. The stock made its biggest one-day gain since it rose 24.2% on April 9, 2025, according to Dow Jones Market Data.

Evercore ISI analyst Mark Lipacis said that Arm's story reminds him of Nvidia's (NVDA). Nvidia's graphics processing units have been the backbone of AI development thus far, but central processing units are having a moment. Lipacis said Arm's energy-efficient architecture and other aspects of its chip development lend themselves well to the demands of current agentic AI workflows.

Lipacis noted that the difference between Arm and Nvidia, however, is that Nvidia developed its chips and then "fought to become the de facto standard" for GPUs. By contrast, he said, Arm's underlying technology is already the de facto standard for CPUs. Now the company is just delivering its own chips based on that standard, which Lipacis called the "easier part."

He increased his price target to $227 from $170 in his latest note to clients.

See also: Micron's stock is spectacularly cheap, as these numbers show

Meanwhile, Raymond James analyst Simon Leopold upgraded Arm's stock to outperform from perform, writing that he had been hoping the company would shift its business model in this way, but was uncertain whether Arm would actually move to start selling its own chips.

The decision could have big implications for Arm's financials, he noted, citing the company's projections. Arm expects about $15 billion of revenue from the chip business in fiscal 2031, for instance. Leopold said that the new initiative could help offset slowing growth in the market for Arm's smartphone chip designs.

He also noted that Meta (META) will be a major customer for the new chip, with plans to use the CPU in its data-center build-out.

TD Cowen's Krish Sankar said Arm may just be getting started in its journey as a seller of chips. He said the company has "other categories of chips in the works," such as those for autonomous vehicles and robotics.

Read more: Arm's stock could rocket 50% as Wall Street wakes up to a 'game-changing' trend, analyst says

-Hannah Pedone

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03-25-26 1748ET