Arm Holdings (NASDAQ: ARM) Price Target Soars on AI Chip Ambitions Despite Smartphone Headwinds

Font: Financial Modeling Prep  • May 07, 2026

• Analyst firm Jefferies restated its "Buy" rating for Arm Holdings (NASDAQ: ARM), increasing its price target to $290 from $210, supported by strong fiscal year 2026 results including a 23% year-over-year increase in revenue and adjusted profit.
• Despite the positive outlook, Arm Holdings shares recently fell by 5% following a warning about weakness in the smartphone market, with CEO Rene Haas noting a "flip to negative" in smartphone unit growth.
• Arm Holdings is strategically diversifying its business by moving into AI data center chips, securing over $2 billion in demand for its new Arm AGI CPUs and partnering with Meta (NASDAQ: META) to produce physical silicon chips.

On May 7, 2026, analyst firm Jefferies restated its "Buy" rating for Arm Holdings (NASDAQ: ARM). Arm Holdings is a U.K.-based company that primarily designs computer chips and licenses its intellectual property (IP) to other technology firms. Jefferies also increased its price target for ARM to $290 from $210, while the stock was trading at $218.74.

This positive outlook for the semiconductor giant is supported by the company's strong fiscal year 2026 results. ARM announced a 23% year-over-year increase in both revenue and adjusted profit. This profit growth is partly due to lower stock-based compensation, which is non-cash pay given to employees, and significant IP licensing activity, especially from China.

Despite the positive rating, ARM shares recently fell by 5% after the company warned of weakness in the smartphone market, as highlighted by Investopedia. CEO Rene Haas stated the company saw a "flip to negative" in smartphone unit growth. He suggests this is due to rising prices for memory components.

To address this, ARM is diversifying its business. The company is moving beyond just licensing its designs and plans to sell its own chips for AI data centers, as noted by Seeking Alpha. This strategic shift aims to capture higher-margin opportunities, demonstrated by its partnership with Meta (NASDAQ: META) to produce physical silicon chips.

Demand for the company's new products appears strong. According to a report from Arm Holdings, it has secured over $2 billion in demand for its new Arm AGI CPUs. This demand is spread across the fiscal years 2027 and 2028, indicating a solid future business pipeline beyond the current smartphone market.