Shares of Arm Holdings PLC (NASDAQ:ARM) had spiked last week on prospects of the company's V9 architecture being used in the new A18 chip for Apple Inc's (NASDAQ:AAPL) iPhone 16.
The company has a proven growth track record and opportunities to continue growing faster than Street expectations, according to Benchmark.
The Arm Holdings Thesis: While the company is a "strong AI play," the elevated growth expectations are already priced into its stock, analyst Cody Acree said in a note Monday.
"For now, we are initiating coverage with a Hold rating and setting no price target, as is Benchmark's standard practice," Acree said.
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"We believe the company is a unique investment property with solid leverage to the industry's fastest growth drivers, a growing position in the rapidly expanding AI and Data Center markets, and a dominant player in key industry verticals, such as smartphones and a growing participation in the AI PC market," the analyst wrote.
He added, however, that Apple's iPhone 16 will follow a "piece-meal AI strategy," with Apple Intelligence being launched sometime next month in the U.S. followed by a staggered rollout globally.
Arm's stock trades at twice the forward multiples of direct AI peers, such as Nvidia Corp (NASDAQ:NVDA), Advanced Micro Devices Inc (NASDAQ:AMD), Broadcom Inc (NASDAQ:AVGO) and Marvell Technology Inc (NASDAQ:MRVL), Acree further stated.
ARM Price Action: Shares of Arm Holdings had declined by 4.92% to $140.12 at the time of publication on Monday.
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