Arm Holdings’ Shares Dramatically Surged Nearly 90%, CEO Highlighting Single-Day Gain Caused by AI-Fueled Demand

By Moon Harper

Feb 09, 2024 12:30 AM EST

Arm Technology — (Photo : Pixabay/Michal Jarmoluk)

Arm Holdings CEO Rene Haas celebrated Thursday as the chip design firm's stock experienced its most significant single-day gain. This surge followed the company's surpassing of Wall Street's earnings and revenue estimates and an optimistic forecast driven by increased demand for their services, particularly in artificial intelligence.

Expansion into Data Centers and the Automotive Industry

During an interview on FOX Business' "The Claman Countdown," Haas credited his company's success to strategies implemented years ago aimed to expand the smartphone market into data centers and the automotive industry, remarking Arm's efforts are paying off, and with the integration of AI, "the need for "compute" seems almost insatiable."

Arm is a chip architect supplier of essential technology to companies like Apple and Nvidia. While initially focused on selling blueprints and other intellectual properties powering mobile phones, it has since successfully diversified its computing chips business. Haas highlighted that AI is now everywhere, which he believes is promising for Arm's growth.

The CEO mentioned that Arm is attracting customers from various industries, with its technology now found in products like Teslas, Fords, Ring smart cameras, and LG appliances. He emphasized that Arm's technology is present in many unexpected places, noting that he can't think of any car company that doesn't use Arm's technology.

Surging Arm Holdings' Shares

Arm Holdings' shares jumped over 55% on Thursday, heading for their strongest day since their impressive market debut in September, driven by robust forecasts for its technology in designing chips for artificial intelligence features.

The surge would push the market value of the British chip designer to over $100 billion as investors eagerly buy the stock as another means of AI investment. This rally marks a significant change from its initial struggles after going public in late 2023, when shares declined.

On Wednesday, executives mentioned that customers increasingly adopted Arm-based central processors to complement Nvidia's chips for AI tasks in data centers. They stated it was working on new laptops and smartphones supporting chatbots and other AI features.

Arm's Technology Being Used as Central Processors

Arm's technology isn't directly involved in AI tasks, but companies like Nvidia are opting for its central processing units to work alongside their AI-specific chips.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, mentioned that Arm benefits from the high demand for Nvidia's technology, especially its data center systems.

Arm plays a crucial role in chipmaking by providing blueprints and other intellectual property for computing chips used in most mobile phones, including those made by Apple. Although its stock dropped by as much as 26% within a month of its September 14 debut, it has since surged by nearly 90%, reaching $120.80 on Thursday.

Analyst Ben Bajarin from Creative Strategies mentioned that the market is gaining a clearer understanding of Arm's business model and how it aligns with major chip design trends in the coming years.

Reuters previously stated that Nvidia, Arm, and Qualcomm are all looking to enter the laptop market to compete with Apple. In many cases, these chip companies are expected to use their technology for AI features but intend to license technology from Arm to finalize the chips.