Arm shares surged more than 24% on Monday, adding to last week’s gains, as the chipmaker continues to impress investors with its better-than-expected third-quarter earnings and strong position in the artificial intelligence market. Since reporting its quarterly financials on February 8, Arm’s stock has soared by over 90%, with no clear explanation for Monday’s surge. This translates to a 142% increase since Arm’s initial public offering in September, lifting its value to approximately $148 billion.
What’s driving the enthusiasm for Arm’s future prospects is its latest instruction set, which accounts for 15% of the company’s royalties, enabling it to potentially double its earnings and break into new markets such as cloud servers and automotive, driven by the high demand for AI technology. Despite a higher earnings multiple than Nvidia or AMD, Arm’s strengths in the royalty side, alongside its optimistic growth forecast, have made it a favored investment on Wall Street. However, the true value of Arm’s stock may become clear next month when SoftBank is due to release its 90% holding of outstanding stock, which has already soared by over $61 billion since the company’s report last week and is now worth upward of $131 billion.