Arm Holdings Upgraded on AI Growth Potential and Undervalued Stock

Arm Holdings stock price increased by 8.3% due to an analyst upgrade. Louis Miscioscia from Daiwa Securities upgraded the stock to a buy rating with a $130 price target, citing the recent decline in AI stocks and Arm`s strong performance. Miscioscia believes the Federal Reserve will soon cut interest rates, which will benefit Arm.

Arm recently reported strong financial results, driven by growth in licensing and royalty revenue. The company is well-positioned to benefit from the growth of AI, as its latest processor is a key component in AI semiconductors.

While Arm`s high valuation multiples may seem concerning, its low forward price/earnings-to-growth ratio suggests it is undervalued.