Arm Holdings PLC soared again on Monday, extending a three-day rally that has driven its value up almost 100 percent, after a blockbuster earnings report last week showed artificial intelligence (AI) spending is bolstering sales.
The chip designer’s shares rose 29 percent on Monday to close at a record on volume that was more than 10 times the average over the past three months. The advance pushed the stock’s gains to more than 90 percent in the three trading sessions since Arm’s results were released after markets closed on Wednesday last week.
“What you’re seeing here is a feeding frenzy for anything to do with AI,” Triple D Trading Ltd trader Dennis Dick said. “Algos are getting involved, retail traders are getting involved, people are buying options. All that is just snowballing.”
Photo: Bloomberg
Arm is benefiting from a push beyond smartphone technology, helping fuel growth and profitability. Last week, the company projected revenue of US$850 million to US$900 million for the March quarter, far surpassing the average analyst estimate at US$778 million. Chief executive officer Rene Haas said opportunities presented by AI are still in the early stages.
So far, Nvidia Corp has been the biggest beneficiary of AI-driven demand for computing power. The chipmaker’s shares more than tripled last year amid a surge in revenue and profits related to sales of its so-called AI accelerator chips. Nvidia’s rally has continued this year, sending the stock up another 46 percent and briefly pushing its market value past that of Amazon.com Inc.
Nvidia rose almost 0.2 percent, closing with a market value of about US$1.78 trillion. While Amazon fell 1.2 percent, it ended with a closing valuation of US$1.79 trillion. The chipmaker did surpass the e-commerce and cloud-computing company during the regular session, temporarily making it the fourth most valuable US-listed company, sitting below Alphabet Inc’s US$1.84 trillion market capitalization. Microsoft Corp weighs in at US$3.09 trillion and Apple Inc at US$2.89 trillion.
Arm and Nvidia were once destined to merge as part of a US$40 billion deal announced in September 2020, but they ultimately dropped the plans. The merger faced opposition from the start with Arm’s own customers scorning the idea and regulators vowing to give it close scrutiny.
Arm has nearly tripled since its shares debuted in September last year and now has a market value of more than US$150 billion, making it more valuable than Boeing Co and AT&T Inc.
The Cambridge, England-based company is still 90 percent owned by Softbank Group Corp, which acquired the business in 2016 for US$32 billion.
“We’re getting to a point where it is moving parabolic, and that means serious market cap is being put in, because this was a fairly large company to begin with,” Dick said.
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