Arm Holdings (ARM -0.30%) has emerged as one of the top semiconductor and artificial intelligence (AI) stocks on the market today. After going public in 2023, the stock soared as investors realized it had more exposure to AI than they initially believed. Today, Arm stock is expensive, trading at a price-to-sales ratio of 38, but it also has a robust set of competitive advantages that set it apart from any other stock in its industry.There are two things that are unique about Arm. First, its business model i ...

Core Viewpoint - Arm Holdings' stock experienced a significant increase of 30% last month, driven by a positive trend in the semiconductor industry and a resurgence in the AI trade, despite the absence of a single news catalyst [1][7]. Group 1: Stock Performance - Arm's stock outperformed the S&P 500 throughout the month, reflecting a steady upward trajectory [2]. - The stock surged during the last week of June, aligning with broader market gains as geopolitical tensions eased and inflation remained low [7]. Group 2: Company-Specific Developments - Arm is recognized for its power-efficient CPU architecture and maintains strong partnerships with major tech companies like Apple and Nvidia, providing extensive exposure across the tech sector [4]. - A notable spike in Arm's stock occurred following Apple's WWDC, where new features were announced, leading to a 4.1% increase in Apple's stock on a high trading volume day [6]. Group 3: Economic Sensitivity and Valuation - Arm's business is sensitive to economic cycles, which can influence demand; the company responded positively to signs of resilience in the U.S. economy, even amid new tariffs [5]. - Despite its competitive advantages in technology, Arm's stock is considered to have a stretched valuation, trading at a price-to-sales ratio of 41, suggesting that investors may want to wait for a more favorable entry point [9].