In recent weeks, Arm Holdings has experienced a significant increase in stock market value, as investors have become increasingly optimistic about the future of artificial intelligence (AI). On Wednesday, the UK-based chip designer reported financial results that highlighted a surge in demand for AI-related technology.
Arm’s chips are currently used in almost every smartphone and are being chosen by chip makers such as Nvidia for central processing units that complement their AI-specific chips. The company was taken private by Japan’s SoftBank in 2016 and returned to the stock market last September. However, it wasn’t until April 2022 when SoftBank shelved its planned sale of Arm to Nvidia due to regulatory objections, but instead announced that it would sell shares in Arm on the Nasdaq stock exchange in New York. Despite this change of plans, SoftBank has still seen its own shares gain almost 30% in the past week.
The demand for Arm-designed chips is also increasing in the automotive industry as self-driving technology continues to develop. This growth is reflected in the company’s financial results and its rising stock market value.
Nvidia, one of Arm’s customers, has also experienced a significant increase in value over the past year due to soaring demand for AI chips. This has made Nvidia one of the most valuable publicly-traded companies in the world with a stock market valuation of around $1.8 trillion (£1.4 trillion) and established it as fifth publicly traded US company to join “Trillion dollar club” alongside technology giants Apple, Microsoft, Alphabet and Amazon.
The growth and success of companies like Arm and Nvidia signal major potential as key players in the AI industry and highlight the growing importance of this technology for businesses across many sectors.