Arm Holdings (ARM +3.95%) stock jumped 4% through 12:45 p.m. ET Thursday. You can thank the friendly bankers at Bank of America for that.
In a note out this morning discussing the semiconductor market, BofA analyst Vivek Arya revised his forecast for growth in CPU sales. He named several stocks that may benefit from his projections -- but perhaps none more than Arm.
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Bank of America CPU forecast
Arya had previously forecast 2030 CPU sales of $170 billion, but he now thinks this estimate too conservative. Seeing how artificial intelligence is evolving and increasingly leaning toward agentic AI, Arya now thinks the CPU market could hit $210 billion in sales by 2030.
That's nearly five times the size of the CPU market in 2025, and implies annualized sales growth of 36% for the semiconductor industry over the next 4-5 years. And here's the thing: As StreetInsider.com reports today, Arya thinks Arm will gain market share faster than any other company over this period -- which means Arm sales should grow faster than 36% annually over the next 4-5 years!
NASDAQ: ARM
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What it means for Arm stock
Arm designs energy-efficient CPU architectures for other companies to manufacture, generating ultra-high-margin licensing and royalty revenue from its services. Analysts, on average, were already projecting nearly 35% annual earnings growth for Arm over the next five years, but if Arya is right in his projections, that's just the baseline.
Ultra-high profit margins (of as much as 97.5% last year, according to data from S&P Global Market Intelligence), plus 36% overall growth in CPU shales, should mean even faster profit growth for Arm. Granted, at a price-to-earnings ratio of 278, Arm seems a very expensive stock today.
If BofA's got its math right, though, Arm stock might actually be worth it.
