Overview
- Arm shares gained roughly 4%–5% in Friday trading following HSBC’s upgrade from Reduce to Buy with a $205 price target.
- HSBC argues Arm is shifting from a smartphone‑centric licensing model toward a larger AI server CPU opportunity as hyperscalers adopt Arm designs and move to v9 and Neoverse subsystems, boosting royalties per chip.
- The bank models industry CPU shipment growth of about 20% in 2026 and 21% in 2027, compared with an average near 2% from 2021 to 2025.
- HSBC projects Arm’s server CPU royalty revenue could grow at roughly a 76% CAGR through FY2031 to around $4 billion, and it modestly raised FY2027–FY2028 earnings estimates.
- HSBC also highlights an unconfirmed possibility that Arm is developing a merchant server CPU, citing higher R&D spending, with potential clarity at the March 24 “Arm Everywhere” event.