UK Chip Designer Arm’s Shares Nearly Double on the AI
Arm Holdings, the UK-based chip designer, has witnessed a remarkable surge in its stock market value, nearly doubling in less than a week as investors place their bets on the flourishing artificial intelligence (AI) industry. The surge follows the company’s financial results announcement last Wednesday, revealing that the demand for AI-related technology is significantly boosting its sales.
Arm, headquartered in Cambridge, designs chips that power nearly every smartphone globally. Acquired by Japan’s SoftBank in 2016, the company returned to the stock market in September of the previous year. Since the recent earnings report, Arm’s shares have soared by over 98%.
The boom in AI technology has also contributed to the success of chipmaker Nvidia, whose shares have more than tripled in value over the past year due to the escalating demand for its AI chips. Nvidia’s impressive performance has propelled it into becoming one of the most valuable publicly-traded companies globally, with a market valuation of approximately $1.8 trillion (£1.4 trillion).
While Arm’s technology isn’t directly focused on AI work, chip manufacturers like Nvidia choose Arm for central processing units (CPUs) that complement their AI-specific chips. Arm’s clientele extends beyond Nvidia to include well-known consumer brands such as Apple. The demand for Arm-designed chips is also on the rise in the automotive industry, particularly due to advancements in self-driving technology.
Founded in 1990 by a group of chip designers in Cambridge, Arm was acquired by SoftBank in 2016 for $32 billion. However, a proposed sale of Arm to Nvidia in 2020 faced regulatory objections globally, leading SoftBank to shelve the deal in April 2022. Instead, the company opted to sell shares of Arm on the Nasdaq stock exchange in New York.
The surge in Arm’s shares brings positive news for SoftBank, which has faced losses due to the declining valuations of some of its investments, including troubled office space firm WeWork. With SoftBank still holding a roughly 90% stake in Arm, its own shares have experienced an almost 30% gain in the past week.
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