ARM Stock Forecast & Price Target

Arm Holdings has demonstrated significant growth in license revenue, reporting $634 million, which reflects a 53% year-over-year increase and a 57% sequential increase, largely driven by high-value license agreements and strong backlog contributions. The demand for Arm’s customizable solutions has surged, with 13 CSS licenses signed and a solid mix of clients from mobile, PC, infrastructure, and automotive segments, indicating a diversified and expanding customer base. Additionally, revenue from smartphone customers rose approximately 30% year-on-year, significantly outpacing the broader market's estimated growth of less than 2%, reinforcing the company's strong positioning within the industry.

ARM Holdings is guiding its 1Q26 revenue to $1.0-$1.1 billion and EPS of $0.30-$0.38, which falls short of Street estimates by $45 million and $0.08, respectively, highlighting a potential decline in investor confidence. The company is also expecting a sequentially soft license outlook down approximately 28% quarter-over-quarter, alongside a projected 2% decrease in royalty revenues, attributed to seasonally weaker volumes in the smartphone market. This context suggests that the mobile industry's stagnation—marked by elongated product replacement cycles and a lack of unique differentiating features—could hinder ARM's growth, contributing to a negative outlook for its stock.