This article first appeared on GuruFocus.
Arm Holdings (ARM, Financials) the chip architecture business whose designs power processors throughout the technology world, was one of the biggest movers of the year Monday.Shares rose 17% to $323 after CEO Rene Haas told CNBC demand for the company’s technology was off the charts. More crucially, Haas said he’s getting more convinced Arm can surpass its $2 billion revenue target for its developing AGI CPU business.That goal has already moved fast. Arm started in March with an initial target of $1 billion, then increased it to $2 billion in May and continued to pump up its confidence through the summer. By September, Haas said, the pipeline was above that level.And there’s a reason investors are taking notice. Nvidia’s Vera CPU, Google’s Axion, Amazon’s Graviton5, and Microsoft’s Azure Cobalt all use Arm-based computation, putting the company in line with the expanding trend of CPUs coupled with AI accelerators.Haas also referred to supply restrictions on wafers, substrates and testing capacity that could take years to work through. That causes problems but also shows demand is outstripping available capacity.The greater story is Arm trying to move away from its usual licensing arrangement to get more value out of the chips themselves. Monday’s surge points to investors increasingly looking at that chance.Next up is Arm’s ability to translate the burgeoning AI pipeline into revenues that justify those increased expectations.
