Haverhill Financial Research · October 12, 2026
Summary: Haverhill price target $242 (12 months)
Arm earns a small fee on almost every advanced chip sold, and that fee is rising as customers move to its newer designs and into data centers. Royalty revenue grew 22% to $715 million in the June quarter, and Arm has started selling its own data center chip, with more than $2 billion of customer demand. At $266.28 the shares trade at about 133 times our fiscal 2027 earnings estimate, a price that already assumes much of management's 2031 plan comes true. Our 12-month price target of $242 sits about 9% below the current price, so we rate the shares Hold.
Arm filings and releases through the Q1 FYE27 shareholder letter; Haverhill Financial Research model; price as of Nasdaq close Oct 9, 2026
The fee per chip keeps rising. Armv9 designs and ready-made compute subsystems carry higher royalty rates, and data center royalties more than doubled year over year in fiscal Q1.
Arm is now a chip seller too. Its AGI CPU, co-developed with Meta, has more than $2 billion of demand across fiscal 2027 and 2028, but first-generation gross margins near 40% are far below the 98% Arm earns on its designs.
Our view: this is an excellent business priced for things to keep going right through 2031. We would want a lower price or proof of the chip ramp before buying.
