Raymond James raised its price target on Arm Holdings to $641 from $565, citing accelerating growth in central processing units (CPUs) and an expanding fabless model.
The firm maintained a Strong Buy rating, projecting Arm’s server CPU sales will reach $1.4 billion by fiscal 2028, up from management’s prior estimate of about $1 billion. Raymond James also set a sum-of-the-parts target of $272 for isolating the company’s intellectual property business, valuing it at 35x earnings.
Analysts expect server royalties to contribute less than 20% of trailing twelve-month revenue but forecast they will exceed one-third of total revenue by fiscal 2028. Gross profit margins stood at 97.5% over the last twelve months, supported by licensing revenue growth of 23% and royalties up 22% year-over-year.
The stock, which closed at $243.32 on Monday, has gained roughly 2% in after-hours trading. Raymond James applied a 78x multiple to royalties and licensing earnings per share, near its five-year median, alongside a 35x multiple for fabless business earnings.
Other analysts adjusted their targets: Rosenblatt lowered its price target to $250 but kept a Buy rating, while Guggenheim reiterated a $255 target with a Buy. Wells Fargo reduced its target to $280 but maintained an Overweight rating. Evercore ISI kept an Outperform rating with a $326 target, and BofA Securities lowered its target to $260.
Arm plans to enter the fabless CPU market in late fiscal 2027, positioning itself to capture additional revenue streams amid surging demand from hyperscalers such as Amazon and Google. Analysts project fiscal 2029 CPU sales could reach $2.7 billion, with calendar 2028 sales ranging from $2.5 billion in a base case to $2.7 billion in a bull case, constrained by manufacturing capacity at TSMC. Bull-case royalty revenue could hit $5.4 billion, driven by aggressive deployments in hyperscaler clusters.
