Shares of Arm Holdings (ARM 0.25%) jumped this week, primarily as part of Monday's surge in tech and artificial intelligence (AI) stocks in response to cooling trade tensions with China after President Donald Trump stepped them up last Friday.
Additionally, Arm, which is known for designing power-efficient CPU architecture, is reportedly working with OpenAI on designing a CPU for a custom Broadcom chip, and it announced a strategic partnership with Meta Platforms on AI efficiency.
As of 1:58 p.m. ET, the stock was up 11.2% for the week, according to data from S&P Global Market Intelligence.
Image source: Getty Images.
Arm gets an AI tailwind
Arm shares tumbled on Friday after President Trump threatened to levy 100% tariffs on China, but it recouped those losses on Monday as part of a broad recovery in the stock market as Trump backed off on those threats.
Arm stock jumped 11% on Monday on the news. Arm is a high-priced tech company, and China is a major buyer of the semiconductors and smartphones that contain Arm's technology, so the thaw in tensions was clearly a positive sign for the company.
Additionally, The Information reported that Arm is working on a CPU for a chip that OpenAI is developing with Broadcom, and Arm announced a strategic partnership with Meta to scale AI efficiency across Meta's global platforms, a task Arm's technology seems well suited for.
What's next for Arm
It's unclear what stage the AI rally is in. While there's some concern about a bubble, capital spending is still soaring, and adoption is growing as well.
The technology adoption is happening, but it's unclear if valuations are getting stretched. We'll get an update soon from Arm when it reports second-quarter earnings on Nov. 5. Analysts are expecting revenue growth of 26% to $1.06 billion and adjusted earnings per share to increase from $0.30 to $0.33.
