Shares of CPU maker Arm Holdings plunged on Thursday as concerns about its ability to meet rising demand for chips overshadowed better-than-expected fiscal fourth-quarter sales and results. But Evercore ISI has every confidence in the semiconductor developer and believes its market value could one day exceed $1 trillion, putting it in line with other mega-corporations such as Nvidia, Apple, Alphabet and Microsoft. “ARM has the same necessary enablers to surpass even the $1 trillion threshold, namely that ARM is a de facto standard for rapidly emerging CPU standards in mobile phones, AI data centers, IoT and automotive robotics in fast-growing markets (agentic AI), matching its long-term advantage in CPU technology,” Evercore analysts Mark Lipacis and Joseph McCormack wrote in a note to investors on Thursday, referring to central processing units and the Internet of Things. According to FactSet, a $1 trillion market cap would make Cambridge, England-based Arm worth nearly five times its current value of about $209 billion. Evercore analysts see Arm’s true advantage in expanding its market capitalization as its diverse and well-established network of suppliers and customers. They’ve got the hard part out of the way, which will make the product launch easier, they said. “ARM has spent the last 35 years building an ecosystem and establishing itself as the de facto standard, which we believe is the most difficult step to take,” Evercore said, reiterating an “Outperform” rating and raising its 12-month price target to $326 from $227. Despite the increasing demand for memory, storage and CPUs in the explosion of artificial intelligence, concerns about component availability are serious and are weighing on Arm’s projected customer demand for its first data center CPU of $2 billion. “The availability of advanced node wafers at TSMC remains the determining factor, limiting near-term confidence in Arm’s ability to capitalize on the $2 billion-plus potential chip opportunity. Analysts at Deutsche Bank and Barclays said Arm reiterated its forecast of $1 billion in revenue for fiscal 2027 to 2028, reinforced by the $2 billion “chip opportunity.” “Despite the impressive demand, [company] has expressed its conservatism by not officially increasing its AGI turnover target in FY27/28, citing uncertainty surrounding this [company’s] “Ability to obtain supply to keep pace with stated demand,” Tom O’Malley wrote for Barclays on Thursday. Evercore called Arm’s forward guidance “conservative.”
