Arm Holdings (ARM -0.61%) designs, develops, and licenses high-performance, low-cost, and energy-efficient CPU (central processing unit) products. Many of the world's top semiconductor companies rely on its products, which are in nearly every single smartphone in the world.
The company's massive and growing total addressable market (TAM) opportunity is powering that enthusiasm. Arm believes its opportunity includes all chips that contain a processor, like those found in smartphones, PCs, digital TVs, servers, vehicles, and networking equipment. The company estimated its TAM will grow to about $246.5 billion by the end of 2025. The company sees catalysts like artificial intelligence (AI), automotive, cloud infrastructure, and the Internet of Things (IoT) driving its future growth and making it less dependent on the smartphone market it currently dominates.
Arm's growth prospects might have you interested in buying its stock. Here's a step-by-step guide on how to purchase the semiconductor stock.
Cloud Computing
How to buy
How to buy Arm stock
People who want to buy Arm Holdings stock will need to do a few things before becoming a shareholder. Here's a step-by-step guide to investing in the semiconductor company.
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Semiconductor
Should you invest?
Should I invest in Arm?
Doing your own research is a crucial part of the investment process. It could increase your conviction that the stock is a good investment. However, you also might learn something about the company that changes your mind about buying its stock.
With this due diligence in mind, here are a few factors about Arm Holdings that could lead you to conclude that it's a good stock to buy.
- You understand Arm's business model, including that a large percentage of its revenue comes from royalties on legacy product designs.
- You believe Arm's revenue growth will reaccelerate as it taps into its large and growing TAM.
- You think Arm can expand beyond smartphones into data centers and the automotive sector.
- You're not worried that a competitor like Intel (INTC -0.14%) will begin taking some of its share of the smartphone market.
- You believe the company can increase earnings at a brisk pace.
- You think Arm will grow into its high valuation.
- Buying shares of Arm would help you build a more diversified portfolio by adding a semiconductor company.
- You're comfortable owning a stock that could be very volatile.
- You're not worried about Softbank's (OTC:SFTBY) large investment in the company.
- You don't need dividend income from your investment.
On the other hand, here are some factors that might lead you to avoid buying its shares:
- You don't completely understand what Arm does or how it makes money.
- You're not sure if Arm can continue growing its revenue and profits briskly.
- You're worried Intel could eventually start stealing some of its leading smartphone market share.
- You think Arm trades at an unjustifiably high valuation.
- You already own several semiconductor and technology stocks.
- You're seeking stocks with less volatility than Arm.
- You're concerned that Softbank might sell more shares, which could weigh on Arm's stock price.
- You're nearing or in retirement and need income-producing investments.
Profitability
Is Arm profitable?
Analyzing a company's profitability is an essential aspect of investment research. Profit growth has typically been the greatest driver of stock price performance over the long term. With that in mind, here's a closer look at Arm's profitability.
Arm is a very profitable company. In the third quarter of its 2025 fiscal year Arm reported $983 million of revenue on record royalty revenue and continued strong growth in its license revenue. Meanwhile, the semiconductor company generated $252 million of net income, a 190% increase from the prior-year period.
The company is also producing lots of cash; its free cash flow in the third quarter was $349 million (and $573 million over the trailing 12-month period). That enabled Arm to end the period with nearly $2.7 billion of cash, cash equivalents, and short-term investments on its balance sheet.
The company's growing revenue and improving profitability are the key to its ability to grow shareholder value over the longer term.
Dividends
Does Arm pay a dividend?
Arm didn't pay dividends as of early 2025. The company retains any earnings from its business to support its long-term growth.
ETFs
ETFs with exposure to Arm
Many investors prefer to passively invest in stocks instead of actively investing by directly owning shares of specific companies. Exchange-traded funds (ETFs) are one of the most common passive investments.
Exchange-Traded Fund (ETF)
Arm Holdings has started to make it into ETFs since its initial public offering (IPO) in 2023. Because it's a U.K.-based company, it's not eligible for inclusion in the S&P 500 and is ineligible for the top S&P 500 ETFs. However, since it trades on the Nasdaq stock exchange, it's in the Nasdaq-100 index and the top Nasdaq ETFs, like the Invesco QQQ Trust (QQQ -0.46%). Though that fund has a very low allocation to Arm Holdings at only 0.1% in early 2025.
A better ETF for investors seeking more meaningful exposure to the recent IPO stock is The Renaissance IPO ETF (IPO 0.53%). The fund buys new IPO stocks and rebalances its holdings as new companies come public. In early 2025, Arm Holdings was its second-largest holding at 9.3% of the fund's assets.
Several semiconductor ETFs also hold shares of Arm Holdings, including the iShares Semiconductor ETF (NYSEMKT:SOXX) with a 0.6% allocation.
Related investing topics
Stock splits
Will Arm stock split?
Arm Holdings didn't have an upcoming stock split on the calendar as of early 2025, but the company has only been public for a short time. It likely won't complete a stock split anytime soon. While shares have gained ground since the IPO (they traded at more than $100 a share in early 2025), that was still an accessible level for most investors (and well below its 2024 peak of almost $190 a share). Shares would have to surge significantly above their IPO price before Arm would need to consider a stock split.
The bottom line on Arm
Arm believes there's a massive and growing market for the chips it designs, positioning the company to deliver accelerated revenue and profit growth in the coming years. This growth catalyst could enable the company to more than grow into its lofty valuation.
However, investors are paying a high premium for that growth potential, which might not develop. Potential investors need to understand the risks before buying shares of Arm.
FAQs
Investing in Arm Holdings FAQs
Is ARM a good investment?
Arm Holdings has tremendous growth potential. It anticipates its total addressable market will reach almost $250 billion by 2025. That gives the company (which generated $983 million in revenue in its fiscal 2025 third quarter) a long growth runway.
However, investors are paying a high price for that growth. Arm traded at a forward price-to-earnings ratio of more than 50 times in early 2025. It was about twice as expensive as Nvidia (NASDAQ: NVDA). That makes its valuation hard to justify, considering that Nvidia is growing exponentially faster than Arm due to demand for its AI chips. So, while Arm has lots of growth potential, it doesn't look like a good investment at its currently elevated valuation. If its revenue and earnings growth rates accelerate and its valuation comes down, it could be a more compelling opportunity.
Is ARM a publicly traded company?
Arm Holdings is a publicly traded company. It closed its initial public offering (IPO) in September 2023. It sold 102.4 million shares at $51 per share. However, while Arm is a publicly traded company, Softbank remains its majority owner.
What is the ticker for ARM?
The stock ticker for Arm Holdings is ARM.
Is ARM traded on the Nasdaq?
Arm Holdings trades on the Nasdaq stock exchange under the stock ticker ARM.
