The Nasdaq Composite (^IXIC 2.27%) has spent much of March more than 10% off its all-time high, which put the index in correction territory. But Wall Street analysts see that drawdown an opportunity to buy shares of Arm Holdings (ARM 4.93%) and Upstart Holdings (UPST 6.25%).Arm is down 33% from its 2024 high due in part to disappointing guidance in the recent quarter. But among the 41 analysts that follow the company, the median target price is $177.50 per share. That implies 42% upside from its current sha ...

Core Insights - The semiconductor industry is dominated by a few major players, but smaller firms like Arm Holdings, Lam Research, and ASML are gaining attention due to their performance and growth potential [1][2]. Arm Holdings - Arm Holdings reported a record revenue of $983 million for the most recent quarter, reflecting a 19% year-over-year increase, driven by strong sales of its Armv9 AI architecture [2][4]. - The company maintains a high gross margin of 98.1% and an operating margin that increased to 45% from 43.8% year-over-year [2]. - Despite a year-to-date share price drop of about 7%, analysts see a potential upside of over 39%, with a 12-month price forecast of $165.23, indicating a moderate buy rating [4]. Lam Research - Lam Research has a 12-month stock price forecast of $98.22, suggesting a 26.03% upside, with 22 analysts rating it as a moderate buy [5][8]. - The company specializes in equipment for chip production, particularly for NAND and DRAM memory products, which are in high demand [6]. - Lam's revenue is significantly derived from China, but it has strong cash reserves of approximately $5.7 billion, allowing for substantial investment in R&D [7]. ASML Holding - ASML, with a market cap of $286 billion, is a leading player in semiconductor equipment, particularly known for its lithography technology, which gives it a competitive edge [9]. - The company has a 12-month stock price forecast of $937.00, indicating a 27.50% upside, with 11 analysts rating it as a moderate buy [9][10]. - Despite a recent earnings miss, analysts project over 16% earnings growth and a consensus price target of $937 per share, reflecting optimism about ASML's future [10].

Core Insights - Arm Holdings is contemplating a significant strategic shift that may greatly affect stock market investors [1] Company Summary - The potential strategic shift by Arm Holdings could lead to substantial changes in its market positioning and investor sentiment [1] Industry Summary - The implications of Arm's strategic considerations may resonate across the semiconductor industry, influencing market dynamics and investor strategies [1]

Group 1: AI Market Potential - The potential for artificial intelligence (AI) to enhance business fortunes has significantly driven stock market growth, with IDC predicting AI spending to reach $632 billion by 2028 [1][2]. Group 2: Advanced Micro Devices (AMD) - AMD has seen a 14% year-over-year revenue growth in 2024, with non-GAAP earnings per share increasing by 25%, driven by strong demand for Ryzen CPUs and data center GPUs [4]. - Despite strong performance, Wall Street was disappointed by AMD's lack of specific revenue guidance for data center GPUs in its fourth-quarter earnings report, which analysts interpreted as a weak signal for sales momentum [5]. - AMD's stock trades at a forward price-to-earnings (P/E) multiple of 21, which is considered attractive for a growing chip company, suggesting potential for the stock to reach Wall Street's price target [7]. Group 3: Arm Holdings - Arm Holdings designs chips used in smartphones and cloud computing, with an average price target of $158.43, indicating a 41% upside from its recent $112 share price [8]. - The company reported a 19% year-over-year revenue growth to $983 million, benefiting from high demand for Arm-based processors due to their low cost and energy efficiency [9]. - Arm's stock is considered highly valued, trading at 191 times free cash flow and 148 times earnings, which may limit its price appreciation until growth aligns with its high earnings multiple [11][12].

Core Insights - The analyst expresses a beneficial long position in shares of NVDA, AVGO, and MRVL, indicating confidence in these stocks [2] - The article aims to provide contrasting views on the analyst's portfolio, suggesting a unique perspective on stock investments [1] Company and Industry Analysis - The analysis is intended for informational purposes, emphasizing the importance of personal research and due diligence before making investment decisions [3] - There is no business relationship with any company mentioned, which may indicate an unbiased perspective [2][4]

Core Viewpoint - Semiconductor stocks, particularly Micron Technology, Lam Research, and Arm Holdings, are experiencing a rebound due to a milder-than-expected inflation report, which alleviates some recession fears and tariff-related concerns [1][2][4]. Group 1: Inflation Impact - The February Consumer Price Index (CPI) report showed a month-over-month increase of only 0.2% and a year-over-year increase of 2.8%, both lower than expectations [3]. - Core inflation, excluding food and energy, also rose by 0.2% month-over-month and 3.1% year-over-year, indicating a cooling inflation trend [3][4]. - Both annual readings remain above the Federal Reserve's target of 2%, but they are 0.1 percentage points lower than anticipated, which is seen as a positive sign amid concerns of stagflation [4]. Group 2: Company-Specific Developments - Micron Technology's stock rose significantly, reacting positively to signs of economic relief, as it is highly cyclical and sensitive to market conditions [5]. - Wolfe Research lowered Micron's price target from $175 to $150 due to short-term pricing challenges in key sectors, but still expects a stronger recovery in the second half of the year driven by PC and smartphone sales [6][7]. - Despite the lower target, Micron is viewed favorably for its growth potential in high bandwidth memory (HBM) used for AI applications [8]. Group 3: Related Companies - Lam Research, which is closely tied to Micron's performance, projects mid-single-digit growth in wafer front-end equipment this year, despite macroeconomic concerns [9]. - Arm Holdings, facing a sell-off due to high valuations, is also seen as a potential AI winner, with its low-power CPUs gaining traction in AI data center applications [10]. Group 4: Market Outlook - The semiconductor sector is recognized as a long-term growth industry, but it is characterized by significant volatility influenced by macroeconomic and geopolitical factors [12]. - With many semiconductor stocks down 30%-50% from their 2024 highs, this may present a buying opportunity for competitively advantaged industry leaders [13].

Group 1: Nvidia's Stock Sales - Nvidia sold two artificial intelligence stocks in Q4, reducing its stake in Arm Holdings by 44% and exiting its position in SoundHound AI [2] - Despite the sale, Arm remains Nvidia's largest holding, accounting for 45% of its portfolio, indicating continued confidence in Arm [8] Group 2: Arm Holdings Overview - Arm designs and licenses CPUs and subsystems for various markets, including mobile and data centers, and provides software development tools for AI workloads [3] - Arm's hardware is present in 99% of smartphones and 67% of other mobile devices, with significant market share growth in data centers [4] - In Q3 FY2025, Arm reported a 19% revenue increase to $983 million and a 26% rise in non-GAAP net income to $0.39 per diluted share [5] - Strong growth in royalty revenue and demand for compute subsystems were noted, with Arm gaining share in the data center market [6] - Analysts expect Arm's adjusted earnings to grow at 32% annually through FY2026, with a current valuation of 91 times adjusted earnings [7] Group 3: SoundHound AI Overview - SoundHound provides voice AI solutions for various industries, including automotive and customer service, with notable clients like Chipotle and Qualcomm [9] - The company has been collecting voice AI data for over 15 years and claims its technology outperforms competitors in speed and accuracy [10] - In Q4, SoundHound's revenue increased by 101% to $34 million, but it reported a widening adjusted loss of $0.05 per diluted share and negative cash from operations of $108 million [12] - SoundHound's stock trades at a high valuation of 49 times sales, significantly above its three-year average of 22 times sales [13] Group 4: Analyst Price Targets - Timothy Arcuri at UBS set a target price of $215 for Arm, implying a 65% upside from its current price of $130 [11] - Dan Ives at Wedbush set a target price of $22 for SoundHound, indicating a 110% upside from its current price of $10.50 [11]

Core Viewpoint - The article discusses the potential for Arm Holdings and Micron Technologies to surpass Advanced Micro Devices (AMD) in market capitalization by 2027, driven by their respective growth trajectories and market demands. AMD Overview - AMD's stock surged 3,240% over the past decade, transforming under CEO Lisa Su since 2014, focusing on redesigning PC CPUs and custom processing units for gaming consoles [1][2] - From 2014 to 2024, AMD's revenue grew at a compound annual growth rate (CAGR) of 17%, with earnings per share (EPS) increasing at a CAGR of 21% since returning to profitability in 2018 [3] - Analysts project AMD's revenue and EPS to grow at a CAGR of 20% and 73% respectively from 2024 to 2027, potentially increasing its market cap from $175 billion to $260 billion by 2027 [4] Arm Holdings Overview - Arm Holdings, with a current market cap of $144 billion, designs power-efficient chips for various applications, including mobile devices and IoT [5] - The company generates revenue primarily from patent royalties and licensing fees, with significant growth driven by demand for its AI-optimized Armv9 chip designs [6] - Analysts expect Arm's revenue and EPS to grow at a CAGR of 23% and 83% respectively from fiscal 2024 to fiscal 2027, potentially increasing its market cap to $270 billion by 2027 [8][9] Micron Technologies Overview - Micron Technologies, valued at $104 billion, is a leading memory chip maker known for producing denser chips [10] - The company experienced a revenue decline of 49% in fiscal 2023 but rebounded with a 62% revenue increase in fiscal 2024, driven by stabilization in the PC and smartphone markets [11] - From fiscal 2024 to fiscal 2027, analysts expect Micron's revenue and EPS to grow at a CAGR of 21% and 150% respectively, with potential market cap growth to over $300 billion if valued at 25 times earnings [12][13] Investment Outlook - All three chipmakers—AMD, Arm, and Micron—are positioned as potential strong investments, with significant growth opportunities in their respective markets [14]

Industry Overview - The semiconductor sector presents strong growth opportunities due to increasing demand for computer chips across various industries, including robotics, automotive, and artificial intelligence [1] Company Analysis: Advanced Micro Devices (AMD) - AMD is positioned as an attractive investment due to its products that support accelerated computing, essential for AI systems [3] - In Q4 2024, AMD's sales to data centers surged 69% year-over-year to $3.9 billion, contributing to a total revenue growth of 24% to $7.7 billion [4] - The PC market also showed strong demand for AMD's hardware, with Q4 revenue growing 58% year-over-year to a record $2.3 billion [5] - AMD's Q4 gross margin improved to 51%, up from 47% the previous year, indicating better cost management and profitability [5] - The company's Q4 balance sheet showed total assets of $69.2 billion against total liabilities of $11.7 billion, with $5.1 billion in cash and equivalents, a 13% increase from Q3 [6] Company Analysis: Arm Holdings - Arm Holdings dominates the smartphone semiconductor chip market with energy-efficient designs and is now leveraging this strength to enter the AI market [7] - The introduction of the Arm compute subsystems (CSS) for consumer devices, utilizing three-nanometer process technology, enhances chip power and efficiency [8] - Arm reported record royalty revenue of $580 million in fiscal Q3, a 23% year-over-year increase, contributing to total sales growth of 19% to $983 million [9] - The company's fiscal Q3 gross margin was 97.2%, up from 95.6% the previous year, reflecting strong financial health [10] - Arm is expanding its revenue streams by producing hardware for its designs, with Meta Platforms as a potential key customer [11][12] Investment Comparison - Both AMD and Arm are strong candidates for investment due to their success in the AI sector, but stock valuation is a critical factor in choosing between them [13] - AMD's forward price-to-earnings (P/E) ratio is lower than Arm's, suggesting that AMD stock represents better value [14] - AMD's share price has become more reasonable following a decline, while Arm's stock appears expensive, making AMD the more attractive long-term investment [16]

Group 1: Market Overview - The Nasdaq Composite fell 5% from its record high due to concerning economic data, including the lowest consumer sentiment in 15 months [1] - Despite the market downturn, analysts remain optimistic about potential gains for Arm Holdings and Axon Enterprise in the coming year [1] Group 2: Arm Holdings - Arm Holdings is a semiconductor company that primarily designs CPU architectures and licenses its intellectual property to clients [3] - The company’s processors are highly efficient, found in 99% of smartphones and 67% of other mobile devices, and are gaining market share in data centers [4] - Arm's Q3 fiscal 2025 revenue rose 19% to $983 million, driven by strong growth in royalty fees, while non-GAAP net income increased 26% to $0.39 per diluted share [5] - CEO Rene Haas emphasized Arm's role in the AI market, predicting increased demand for compute in AI cloud applications [6] - Wall Street estimates a 32% annual increase in Arm's adjusted earnings through fiscal 2026, leading to a current valuation of 96 times adjusted earnings [7] Group 3: Axon Enterprise - Axon specializes in public safety, known for its Taser products and a suite of sensors and software for law enforcement [8] - The company integrates AI into its products, such as using AI for transcribing and redacting audio and video in its digital evidence management software [9] - Axon launched Draft One, a generative AI application for automating report writing, which quickly reached a $100 million revenue pipeline [10] - Analysts project a 135% upside for Axon, with a bull-case target price of $1,150 per share from its current price of $488 [10] - Despite a recent downgrade due to valuation concerns, some analysts believe the market overreacted, and Axon shares present a buying opportunity [11][12] - Axon's earnings have consistently exceeded consensus estimates by an average of 34% over the last six quarters, suggesting potential for reasonable valuation if the trend continues [13]