Arm Holdings (NASDAQ:ARM) shares climbed about 13% in premarket trading on Wednesday after analysts delivered positive reactions to the company’s newly introduced internally developed processor, describing it as a significant step that could broaden Arm’s business model and strengthen its long-term earnings potential.
Analyst Simon Leopold at Raymond James upgraded the stock to Outperform and set a $166 price target, pointing to Arm’s move “to include a fabless semiconductor element.”
He said the strategic change “would yield strong operating profit, aid growth and add a new dimension to the strategy,” adding that Arm has lifted its long-term outlook, projecting earnings of $3 per share by fiscal 2028 and $9 by fiscal 2031.
The firm highlighted the launch of Arm’s AGI CPU, developed in collaboration with Meta, which intends to deploy the processor alongside its MTIA accelerator.
Raymond James said the new chip, built with Neoverse V3 cores and a high-bandwidth architecture, delivers “2x the performance of x86 CPUs” in its high-end reference configuration and is designed to support agentic AI workloads.
“Meta has committed to multiple generations. Additionally, Arm has confirmed deployments with others including Cerebras, Cloudflare, F5, OpenAI, Positron, Rebellions, SAP, and SK Telecom,” Leopold noted.
Chris Caso, analyst at Wolfe Research, wrote in a note to clients that the AGI CPU signals Arm’s entry into the “>$100bn merchant CPU market,” forecasting the processor could generate as much as $15 billion in revenue by fiscal 2031.
Caso added that Arm “feels comfortable with in excess of $3 of EPS by FY28,” surpassing his earlier projection.
Both research firms believe the rapid growth of agentic AI and Arm’s expanding list of partners and customers suggest a significantly larger long-term market opportunity for the company.