Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 6 Feb, 26 | ARM | Buy | USD 110.88 | USD 117.0 | USD 125.0 | Same day | Closed |
11.56%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Arm Holdings plc architects, develops, and licenses central processing unit products and related technologies for semiconductor companies and original equipment manufacturers. The company is involved in the licensing, marketing, research, and development of microprocessors, systems intellectual property (IPs), graphics processing units, physical IP and associated systems IPs, software, tools, and other related services. It also offers arm central processing units, accelerators, system IP products, and compute platform products, as well as development tools and software. The company's products are used in various markets, such as automotive, computing infrastructure, consumer technologies, and Internet of things. It operates in the United States, the People's Republic of China, Taiwan, the Republic of Korea, and internationally. Arm Holdings plc has a strategic collaboration with International Business Machines Corporation to develop dual-architecture hardware that helps enterprises run future AI and data intensive workloads. The company was founded in 1990 and is headquartered in Cambridge, the United Kingdom. Arm Holdings plc operates as a subsidiary of SoftBank Group Corp.
Licensing Momentum and ACV Growth: ACV increased to USD 1,620 million (Q3 FYE26) vs USD 1,270 million (Q3 FYE25) — 28% growth
Royalty Revenue Acceleration: Q3 FYE26 royalty revenue of USD 737 million vs USD 580 million (Q3 FYE25) — 27% growth
Elevated Operating Expense Growth: Non-GAAP operating expenses of USD 716 million (Q3 FYE26) vs USD 522 million (Q3 FYE25) — 37% increase
Margin Compression: Non-GAAP operating margin declined to 40.7% (Q3 FYE26) vs 45.0% (Q3 FYE25)
Arm’s investment outlook remains exposed to semiconductor industry cyclicality, hyperscaler concentration risk, sustained R&D cost escalation, potential smartphone unit softness due to supply-chain constraints, and execution risks associated with expanding into more integrated compute and silicon solutions
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 110.88 | 98.0 | 117.0 | 125.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Record Revenue Momentum and Scale Expansion: Arm delivered record quarterly revenue of USD 1,242 million in Q3 FYE26, representing a 26% year-on-year increase compared with USD 983 million in Q3 FYE25. This marks the fourth consecutive quarter above the USD 1 billion threshold, underscoring structural demand strength across cloud AI, edge AI, and physical AI markets. Growth was broad-based, reflecting deeper platform penetration and increasing monetization per chip.
Royalty Revenue Strength Driven by Armv9 and Data Center Adoption: Royalty revenue increased 27% year-on-year to USD 737 million in Q3 FYE26, compared with USD 580 million in Q3 FYE25 . Growth was primarily supported by rising adoption of Armv9 architecture, higher royalty rates per chip, expanding compute subsystem (CSS) deployments, and triple-digit expansion in data center royalties. Arm’s Neoverse CPUs have now surpassed 1 billion cores deployed, and management indicated that Arm’s share among top hyperscalers is expected to approach 50%, reflecting growing CPU importance in AI inference workloads.
Licensing Growth and Expanding Strategic Engagements: License and other revenue reached USD 505 million in Q3 FYE26, up 25% from USD 403 million in Q3 FYE25 . Growth was supported by high-value architecture licenses, expanded Arm Total Access (ATA) agreements, and continued traction in CSS licensing. Annualized Contract Value (ACV), a key forward-looking indicator of licensing momentum, increased 28% year-on-year to USD 1,620 million, compared with USD 1,270 million in Q3 FYE25. This reflects sustained customer commitment to next-generation Arm architectures.
Operating Profitability and Margin Dynamics: Non-GAAP operating income increased 14% year-on-year to USD 505 million in Q3 FYE26, compared with USD 442 million in Q3 FYE25 . However, non-GAAP operating margin declined to 40.7% from 45.0%, reflecting accelerated R&D investments. Non-GAAP EPS improved to USD 0.43 in Q3 FYE26, up from USD 0.39 in Q3 FYE25, representing 10% growth. The expansion in earnings despite margin compression demonstrates operating leverage supported by royalty scale.
Cash Flow and Balance Sheet Position: Operating cash flow totaled USD 365 million in Q3 FYE26, down from USD 423 million in Q3 FYE25. Non-GAAP free cash flow declined to USD 169 million, compared with USD 349 million in the prior year quarter. Despite quarterly variability, trailing twelve-month non-GAAP free cash flow improved to USD 893 million, up from USD 573 million, demonstrating improving long-term cash generation capacity. Cash and short-term investments stood at USD 3,542 million, supporting continued strategic investment.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given to Arm Holdings plc (NASDAQ: ARM) at the closing market price of USD 110.88, as on Feb 05, 2026
Data Powered by EOD Historical Data (“EODHD”).
Sector: Technology Industry: Semiconductors
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| ARM Arm Holdings plc American Depositary Shares |
20.58 4.91% | 439.46 | 233.99 | 86.21 | 39.90 | 23.90 | 39.24 | 165.87 |
| NVDA NVIDIA Corporation |
6.04 2.95% | 210.69 | 62.11 | 36.76 | 36.43 | 51.65 | 36.19 | 61.96 |
| AVGO Broadcom Inc |
18.45 4.70% | 411.35 | 78.55 | 35.84 | 27.93 | 23.69 | 28.47 | 52.08 |
| TSM Taiwan Semiconductor Manufacturing |
29.97 6.94% | 462.12 | 19.45 | 15.92 | 0.24 | 4.85 | 0.22 | 0.30 |
| AMD Advanced Micro Devices Inc |
24.89 4.86% | 537.37 | 108.58 | 40.98 | 13.39 | 7.12 | 12.75 | 60.70 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels as on February 6, 2026. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned has been achieved and is subject to the factors discussed above.
Note 4: StockNextt reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.
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Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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