Arm Holdings, a UK-based chip designer, has nearly doubled its stock market value in less than a week as investors are optimistic about the boom in artificial intelligence (AI). Last Wednesday, the company, headquartered in Cambridge, reported financial results that highlighted an increase in demand for AI-related technology, which is boosting its sales.
Arm’s chips currently power almost every smartphone in the world and are being chosen by chip makers like Nvidia for central processing units that complement their AI-specific chips. The company was taken private by Japan’s SoftBank in 2016, and it returned to the stock market last September. Demand for Arm-designed chips is also increasing in the automotive industry due to the development of self-driving technology.
Nvidia, one of Arm’s customers, has seen its shares more than triple in value over the last year on the back of soaring demand for AI chips. This has made Nvidia one of the most valuable publicly-traded companies in the world, with a stock market valuation of around $1.8 trillion (£1.4 trillion) and established it as the fifth publicly-traded US company to join the “Trillion-dollar club”, alongside technology giants Apple, Microsoft, Alphabet and Amazon.
In April 2022, SoftBank shelved its planned sale of Arm to Nvidia due to regulatory objections and instead announced that it would sell shares in Arm on the Nasdaq stock exchange in New York. Despite this, SoftBank, which retains a roughly 90% stake in Arm, has seen its own shares gain almost 30% in the past week.
Arm was founded in 1990 in Cambridge, and was acquired by SoftBank in 2016 for $32bn. The company’s growth in stock market value and demand for its technology related to AI signal major potential as a key player in the industry.