Prediction: Arm Is Our Top Pick With 83% Upside Driven by Data Center Royalty Boom
Arm's IP now sits inside the AI hardware powering every major hyperscaler, yet the market may still be treating it like a chip company from the smartphone era. Here is why that disconnect creates one of the more compelling setups…
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Few semiconductor stories are moving faster than Arm right now. AI is remaking data centers, edge devices, and everything in between, and Arm’s IP is embedded in a growing share of it.
Our 24/7 Wall St. price target for Arm (NASDAQ:ARM | ARM Price Prediction) is $612, implying 83.67% upside from the current price of $326.62. Our recommendation is buy, with high confidence at 90%.
The core thesis: Arm is the CPU foundation for AI infrastructure, and the market is still underpricing that shift.
24/7 Wall St. Price Target Summary
| Metric | Value |
|---|---|
| Current Price | $326.62 |
| 24/7 Wall St. Price Target | $612 |
| Upside | 83.67% |
| Recommendation | BUY |
| Confidence Level | 90% |
ARM Just Ran 35% in a Week on AI CPU Momentum
Arm shares are up 35.06% over the past week and 198.8% year to date.
Q1 FY2027 revenue reached $1.29 billion, up 22.41% YoY, with royalty revenue up 22% and licensing up 23%. GAAP EPS came in at $0.25, missing the $0.4038 consensus, though non-GAAP EPS reached 45 cents, above guidance. CEO Rene Haas said, “AI is changing where and how compute happens, and ARM is at the center of it.”
Why Bulls See a Breakout Beyond $667
The bull case rests on Arm becoming the default CPU platform for AI infrastructure. Data-center royalty revenue more than doubled year over year in Q1, and Arm Neoverse shipments have surpassed 1.5 billion cores, with the last 500 million cores shipping in nine months.
NVIDIA Vera, Google Axion, AWS Graviton 5, and Microsoft Cobalt 200 are all Arm-based. Customer demand for the Arm AGI CPU exceeds $2 billion across FY2027-FY2028, versus the original $1 billion pipeline.
Management sees a data-center CPU TAM of more than $100 billion by 2030, with Haas citing estimates as high as $220 billion. Our bull-case scenario points to $666.74. Spotting this kind of setup early is the whole exercise behind our free Next Nvidia Playbook, which catalogs the traits big tech winners share before their runs.
Risks Worth Watching
Arm trades at a trailing P/E of 393, and Q1 GAAP EPS of $0.25 missed by 38.09%. Operating income fell 14.95% YoY as opex rose 28%. Bulls counter that R&D and share-based comp fuel the AGI CPU ramp, shipping late 2026, with non-GAAP operating margin near 41%.
The Qualcomm licensing trial in Q4 2026, Arm China exposure, US export controls, and PRC-Taiwan risk are real overhangs. Our bear-case scenario points to $455.41, well above today’s price.
How ARM Compares to NVIDIA and Qualcomm
NVIDIA (NASDAQ:NVDA) is the AI compute benchmark and an Arm customer via its Arm-based Vera CPU. NVIDIA trades at a trailing P/E of 46 with a net margin of 55.6% and Q2 FY2027 revenue growth of 105.85%. Arm’s 393 P/E looks stretched against NVIDIA’s 46, but Arm’s forward earnings acceleration closes that gap in our model.
Qualcomm (NASDAQ:QCOM) is the litigation counterparty and a large Arm licensee entering AI data-center CPUs with the Arm-based Dragonfly C1000. Qualcomm trades at a trailing P/E of 38 but posted Q3 FY2026 revenue of $9.95 billion, down 4.03% YoY as handsets shrank 20%. Arm’s growth premium is real, making our target reasonable on trajectory.
| Company | Trailing P/E | Recent Revenue Growth |
|---|---|---|
| Arm | 393 | 22.41% |
| NVIDIA | 46 | 105.85% |
| Qualcomm | 38 | -4.03% |
AI CPU Inflection Supports Our $612 Target
Our 24/7 Wall St. price target of $612 reflects 83.67% upside and a buy rating at 90% confidence. The case rests on data-center royalty growth and AGI CPU pipeline expansion beyond the initial $1 billion opportunity.
The thesis strengthens if royalty growth stays north of 20% and the AGI CPU ramp lands on schedule in late 2026. It weakens if the Qualcomm trial produces a materially adverse ruling or the AGI CPU launch slips into FY2028.
Here is where our model projects Arm could trade in the coming years, assuming current growth trajectories hold.
| Year | 24/7 Wall St. Price Target |
|---|---|
| 2026 | $612 |
| 2027 | $991 |
| 2028 | $1,190 |
| 2029 | $1,524 |
| 2030 | $1,745 |
These projections assume Arm executes on its AGI CPU roadmap and hyperscaler design wins. Significant upside or downside could come from Qualcomm trial outcomes, export controls, or a step-change in AI infrastructure spend.
Contact [email protected] for any questions or corrections.
Vandita Jadeja is a financial publisher with over a decade of experience writing about financial topics, including investment, savings, retirement, insurance and banking. Vandita is a Chartered Accountant who loves to debunk financial concepts for readers.
Her work has appeared on sites that include The Motley Fool, InvestorPlace, and Benzinga. She covers investing and focuses on stock picks and price prediction for 24/7 Wall St.
When not looking for the next stock investment opportunity, she can be found traveling, reading, chasing sunsets and enjoying her iced latte.
