Why Arm Holdings Gained 31% in the First Half of 2025
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S of Arm Holdings (ARM 0. 29%) continued to march higher in the first half of the year, benefiting from the broader tailwinds in artificial intelligence (AI), market gains, and solid...
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July 10, 2025
03:54 PM
The Motley Fool
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S of Arm Holdings (ARM 0. 29%) continued to march higher in the first half of the year, benefiting from the broader tailwinds in artificial intelligence (AI), market gains, and solid growth in its earnings report
Arm, which licenses its central cessing unit (CPU) architecture to partners Apple and Nvidia, is well positioned to capitalize on the data center boom and future growth in edge AI, as its architecture is more power-efficient than the competing x86 alternative used by Intel and AMD
As a result, Arm continues to earn a high valuation since it has a long runway of growth in the AI era
According to data from S&P Global Market Intelligence, the stock the first half of the year up 31%
As you can see from the chart below, Arm started the year on a high note before crashing on tariff-driven concerns and then recovered to nearly its previous peak
Arm rides the AI wave Arm has one of the most resilient models in the semiconductor sector, as it earns money when it signs its licensing agreements and on royalties when the ducts containing its designs are sold
That creates a long-term, high-margin revenue and is part of the reason the stock trades at a price-to-sales (P/S) ratio of 39 right now
Through the first half of 2025, Arm jumped early in the year as it was named as one of the partners in the Stargate ject, which plans to invest up to $500 billion in AI infrastructure
Softbank, the Japanese investment giant that owns roughly 90% of Arm, will be one of the lead partners, which could be an advantageous position for Arm
The stock soared on the news
In its two quarterly reports, the company showed off solid growth on both the top and bottom lines, though the stock pulled back both times
In May, during the fiscal fourth quarter, the stock fell in part due to management's decision not to vide full-year guidance, which was due to broader uncertainty in trade policy and the fact that its customers had also not vided guidance
Overall revenue rose 34% to $1. 24 billion, paced by strong licensing growth, and operating income was $410 million, showing its impressive margins
Image source: Getty Images
Can Arm keep climbing
Arm still has a lot of growth in front of it, but given its high valuation, it may take time for the stock to move substantially higher
Still, the is in an excellent position to capitalize on the AI boom
Investors may want to take advantage of any pullbacks in the stock over the rest of the year
Jeremy Bowman has positions in Advanced Micro Devices, Arm Holdings, and Nvidia
The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Intel, and Nvidia
The Motley Fool recommends the ing options: short August 2025 $24 calls on Intel
The Motley Fool has a disclosure policy.
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