Nvidia Corp NVDA shares,
Super Micro Computer Inc. shares are up 240% over the past year. SMCI,
Up 760% With moves like these, investors seem eager to participate in what could be the next explosion in the AI trend.
And judging by the explosive moves in Arm Holdings PLC's ARM stock,
In recent days, Wall Street may have pegged the chip designer as the next big winner. The stock rose 29% in Monday's session and has nearly doubled since the company reported earnings after the closing bell last Wednesday.
While Arm's recent results and guidance were “very impressive,” in the view of Mizuho desk analyst Jordan Klein, they don't explain a rise of this magnitude.
See more about earnings: Arm shares rose 50% after the company proved to be an early winner in artificial intelligence
Instead, Klein told MarketWatch in an email, the recent action in Arm shares “has the look and feel of a retail investor chase,” with investors seeing Arm as a “bigger play on AI” than it was previously, and as has been the case in The former, rushing to participate in the event.
The semiconductor sector in general has seen “money pouring in from everywhere” recently as investors look for “the next major AI enabler,” he continued.
Arm's earnings outlook has emerged in the wake of the latest report, and analysts tracked by FactSet now expect $1.49 in adjusted earnings per share for fiscal 2025, which ends next March. This compares to the consensus estimate of $1.36 as of late January.
But Arm's stock price has seen a much larger increase, with Arm shares now trading at 100 times estimated earnings per share in fiscal 2025.
“Now the valuation is being ignored,” Klein told MarketWatch. Additionally, he noted that Arm has a minimal float, with Softbank owning 90% of the shares.
See also: A surge in Arm shares burned short sellers on Thursday, with as much as $445 million in paper losses