Arm Holdings is near a handle buy point of 168.31 in a very deep cup base. Shares have tripled since they started trading on the Nasdaq in September 2023 at an initial offering price of $51. Arm stock is Tuesday's selection for IBD 50 Stocks To Watch.
Earnings growth accelerated in the two most recent quarters, giving ARM stock an ideal Earnings Per Share Rating of 99. The Composite Rating sits at 98 while the Relative Strength Rating of 87 shows the stock has been outperforming the majority of stocks in the Investor's Business Daily database. The RS Rating has also improved from just 19 three months ago. As of Monday's closing price, the stock had gained 31% year to date and had climbed 217% from its IPO price.
ARM creates semiconductor designs and licenses them to chipmakers and systems companies. Artificial intelligence chip leaders like Nvidia and Advanced Micro Devices license its products.
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Custom Chip King
Other tech behemoths such as Apple also use ARM architecture for custom chips that go into smartphones as well as laptops.
Earlier, Nvidia attempted to buy ARM Holdings for $40 billion but regulators blocked the deal.
Arm will announce its first-quarter results on July 30. Analysts polled by FactSet estimate earnings of 35 cents on sales of $1.1 billion.
Meanwhile, BNP Paribas analysts this month upgraded the stock to an outperform rating from neutral, according to MarketWatch. They also raised their price target to $210 from $110. BNP anticipates that ARM could move into the AI custom chip design market as tech giants increase their spending on advanced technologies.
Mutual Funds Own 47% Of Arm Stock
Mutual funds own 47% of outstanding shares. More funds have added the stock to their holdings in six out of the past seven quarters. The Accumulation/Distribution Rating of B also shows that funds have been net buyers of the stock over the past 13 weeks. The Up/Down Volume Ratio of 1.2 indicates that demand for the stock has been running high for the past 50 days.
In Investor's Business Daily's mutual fund index, the American Century Focused Dynamic Growth Fund (ACFSX), the Fidelity Contrafund (FCNTX) and the Franklin Growth Fund (FKGRX) hold shares of Arm stock.
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