Arm rises after UBS initiated coverage at 'buy" on AI growth
** U.S.-listed shares of Arm Holdings ARM.O up 3.4% at $140.67 Mon after UBS started coverage of British chip designer at 'buy', saying artificial intelligence (AI) set to ramp higher
** Brokerage set PT at $160, implying ~18% upside to stock's close on Fri
** AI driving positive growth across all of Arm's key end markets, UBS said in note late Fri, with data center "particularly fertile ground as the customer base for its IP licenses expands and cloud customers push for more power optimized CPU architectures"
** Qualcomm QCOM.O and MediaTek 2454.TW/Nvidia NVDA.O AI PC efforts should lead Arm to grow PC unit/rev share from 17%/17% in 2023 to 22%/24% in 2028, driving a 15% Arm PC royalty CAGR, brokerage said
** Data center ramping even faster with hyperscalers' in-house Arm processor efforts driving Arm server rev/unit share from 7%/5% in 2023 to 23%/16% in 2028, UBS said
** 38 brokerages cover ARM and recommendation breakdown is 23 "strong buy" or "buy", 12 "hold" and 3 "sell" or "strong sell" ratings, per LSEG
** Median PT of $159 up from $137 a month ago
** With move on Mon, stock up 87% YTD vs Philadelphia chip index's .SOX 20% advance and Nasdaq 100's .NDX 24% climb
(Lance Tupper is a Reuters market analyst. The views expressed are his own)
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