Jefferies Raises Arm Holdings Target as AI Demand Drives Growth

Jefferies has increased its price target for Arm Holdings (NASDAQ: ARM) from $290 to $320, citing a robust long-term outlook for CPU growth driven by artificial intelligence workloads. The firm projects Arm’s AI-related CPU revenue to hit $18 billion by fiscal 2031, outpacing previous company guidance. Jefferies anticipates the total addressable market for CPUs will expand to $200 billion by 2030, with Arm positioned to capture significant share through its architecture in data centers and upcoming AI accelerator platforms.

In contrast to the optimism surrounding Arm, UBS has taken a more cautious stance, cutting price targets for Arm, Qualcomm (QCOM), and KLA Corp. (KLAC). Despite the reductions, UBS maintains a "Buy" rating for Arm, suggesting that the recent price pullbacks provide an attractive entry point for investors. This divergence highlights a split in analyst sentiment regarding the immediate sustainability of current semiconductor growth rates amidst high valuations and macroeconomic pressures.

The mixed analyst outlook reflects the broader volatility within the semiconductor sector as market players re-evaluate the impact of AI on hardware spending. While companies like Arm are central to the CPU infrastructure fueling the AI boom, concerns remain regarding supply chain resilience and the timing of AI revenue realization. Investors are closely monitoring analyst ratings and price targets to gauge potential market rotation, with current trading data indicating that shares of all three companies rose despite the lowered targets from UBS.