Published: February 12, 2024 at 8:12 PM ET
Nvidia Corp. NVDA stock is up 240% over the past year, while Super Micro Computer Inc. SMCI’s stock is up 760%. All of this suggests investors are eager to participate in what could be the next big explosion in the artificial intelligence trend.
And judging by the explosive moves in Arm Holdings Inc.’s stock ARM over the past few days, Wall Street may have earmarked the chip designer as the next big winner. Shares rose 29% in Monday trading, nearly doubling since the company announced its earnings after last Wednesday.
Nvidia Corp. stock
NVDA
is up 240% over the past year, Super Micro Computer Inc. stock is on the rise.
SMCI
is 760% higher. All of this suggests investors are eager to participate in what could be the next big explosion in the artificial intelligence trend.
Judging from the explosive movement of Arm Holdings’ stock price,
arm
In recent days, Wall Street may have pegged the chip designer as the next big winner. Shares rose 29% in Monday trading, nearly doubling since the company announced earnings after the closing bell last Wednesday.
Mizuho Desk analyst Jordan Klein said Arm’s latest results and guidance were “very impressive” but don’t explain a rally of this size.
Learn more about earnings below. Arm proves early AI winner, shares soar 50%
Rather, recent moves in Arm’s stock “have the feel of a chase with retail investors,” Klein told MarketWatch in an email. Investors see Arm as a “much bigger AI-powered endeavor” than before, and they’re rushing to get in on the action.
The overall semiconductor sector has been seeing “money coming in from everywhere” lately as investors seek “the next major enabler of AI,” he continued.
Arm’s earnings forecasts have emerged following the latest report, with analysts tracked by FactSet currently projecting adjusted earnings per share of $1.49 for the fiscal year 2025, which ends next March. We are making a trial calculation. By comparison, the consensus estimate in late January was $1.36.
But Arm’s stock price has risen much more than that, with Arm stock currently trading at 100 times estimated fiscal 2025 earnings per share.
“Valuation is now ignored,” Klein told MarketWatch. Additionally, he noted that Arm’s free float is minimal as SoftBank owns 90% of the stock.
See also: Short sellers burnt out as Arm stock soars Thursday, with paper losses amounting to $445 million
