KeyBanc Capital initiated coverage of Arm Holdings (NASDAQ:ARM) with an Overweight rating and $65 per share price target on Wednesday, stating the "world increasingly needs Arm."
Analysts believe ARM will increasingly benefit from key semiconductor design trends, including rising chip complexity.
This will come about as evolving compute chip architectures "increasingly compensate for scaling challenges as a result of the demise of Moore's Law." the analysts wrote.
ARM stands to benefit as computing requirements across mobile, data center, auto, and IoT become increasingly more demanding and complex; this will only increase the industry's reliance on Arm IP, ultimately resulting in royalty rate expansion and market share gains," they added.
Furthermore, KeyBanc expects meaningful market share gains in data center, networking, and automotive to support outsized growth for Arm.
"We anticipate share gains will be the greatest within cloud infrastructure, where share is expected to increase from 10% in 2022 to 28% in 2025, and in automotive, where ADAS market share is expected to increase from 42% in 2022 to 78% in 2031. We anticipate share gains will be driven by increased compute requirements and greater adoption of Arm IP within these end markets," the analysts concluded.