Shares of Arm Holdings (ARM +2.81%) were moving higher for the second day in a row as investors continued to react positively to Nvidia's affirmation of the CPU boom in its earnings call on Wednesday. The chip giant called out a $200 billion addressable market for CPUs and forecast $20 billion in revenue from its Vera CPU, which complements the new Rubin GPU.
As of 11:50 a.m. ET, the stock was up 3.1% on the news, after gaining as much as 5.6% earlier in the session. Other CPU stocks like Intel and AMD were up on the news as well.
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Arm climbs again
There was no additional news out on the stock today, but Arm could be the biggest winner from Nvidia's forecast and emerging CPU business. Arm is a pure-play CPU stock. Currently, it makes its money by licensing CPUs and collecting royalties. Investors cheered when the company announced that it was making its own chip for the first time, launching the Arm AGI CPU. The company forecast the chip would bring in $15 billion in annual revenue by fiscal 2031, and called for $25 billion in total annual revenue.
The Vera CPU, which is licensed from Arm, could also be a significant opportunity for the company. Though its royalty rate has not been reported, a $20 billion product is likely to move the needle for Arm.
NASDAQ: ARM
Key Data Points
What's next for Arm
Arm is now trading at a sky-high valuation with a price-to-sales ratio of 65. However, that doesn't seem unreasonable considering where the company is headed and its competitive advantages in its CPU architecture, which is more power-efficient than the competing x86 platform that Intel and AMD use.
Arm's forecast for its own CPU growth is likely conservative, and the company shared recently that demand was more than double the available supply. High expectations are baked into Arm stock right now, but the demand is there. The stock could move even higher if sentiment toward CPUs continues to increase.
