The Zhitong Finance App learned that Dama analysts believe that semiconductor manufacturer Arm Holdings (ARM.US) is expected to achieve higher revenue and profits in the medium term due to new deals in the Chinese market and Apple (AAPL.US) payments.

Morgan Stanley raised Arm's 2026 revenue forecast from $4.85 billion to $4.92 billion, while also raising its earnings per share forecast from $2.15 to $2.18. The bank believes that demand for computational subsystems (CSS) will begin to expand from data centers to transactions with Chinese customers, car manufacturers, and even the mobile industry.

Morgan Stanley said, “Given the high rate attached, this will have a huge impact on royalties. We haven't simulated these royalties due to the uncertainty of timing and scale.”

As early as September of last year, Apple signed a long-term agreement with Arm to use Arm chip technology, which lasts until 2040. However, none of the major payments in this multi-year agreement have gone into Arm's profit and loss account.

One of Arm's biggest draws to investors is probably the use of its NeoVerse V2 core in Nvidia's (NVDA.US) Grace CPU, but Morgan Stanley is wary of the cash this partnership brings.

Analysts believe Arm will get $35 per CPU, rather than an overall share from any overall “block” price (believed to be between $30,000 and $40,000).