Thursday, February 29, 2024

Arm shares jump 29% as post-earnings rally extends to second week

Masayoshi Son, Chairman and CEO of SoftBank Group Corp.

Kiyoshi Ota | Bloomberg | Getty Images

Arm Shares soared 29% on Monday, extending last week’s rally as investors continue to applaud the chipmaker’s better-than-expected third-quarter earnings and its position in the artificial intelligence boom.

Arm is now up 93% since reporting its quarterly financial results on February 7, but without a clear catalyst for Monday’s move. The stock has nearly tripled since Arm’s IPO in September, closing at $148.97, and is now worth nearly $153 billion, just over $30 billion less. Intel market capitalization.

Last week, Arm said it could charge twice as much for its latest instruction set, which accounts for 15% of the company’s royalties, suggesting it can increase its margin and make more money with it. the new chips. It also said it is entering new markets, such as cloud servers and automotive, due to demand for AI.

The strength of its royalties, combined with Arm’s optimistic growth forecasts, has made the company the latest AI darling among investors, despite a higher earnings multiple than Nvidia or AMD.

However, Arm’s value could become clearer next month, when the 180-day post-IPO lock-up period expires. SoftBank still owns 90% of the shares outstanding, meaning its stake in Arm has grown by more than $61 billion since the company reported last week and is now worth more than $131 billion.

For the second time in three trading sessions, Arm’s daily volume exceeded 100 million shares, more than 10 times the stock’s average.

Correction: Arm released its quarterly financial results on February 7. An earlier version incorrectly stated the date.

WATCH: Arm has a very clear AI story that will lead to growth

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