UK chip designer Arm Holdings has experienced a significant increase in its stock market value in less than a week, as investors anticipate the growth of artificial intelligence (AI). The company’s financial results, released last Wednesday, revealed that the demand for AI-related technology is driving its sales. Arm’s chips are already used in nearly every smartphone worldwide. After being taken private by Japan’s SoftBank in 2016, Arm returned to the stock market in September 2021. Since its earnings announcement last week, Arm’s shares have surged by over 98%. This surge mirrors the success of chipmaker Nvidia, whose shares have more than tripled in value over the past year due to high demand for its AI chips. Nvidia has become one of the world’s most valuable publicly-traded companies, with a market valuation of approximately $1.8 trillion (£1.4 trillion). Arm’s technology is not directly used for AI work, but chip manufacturers like Nvidia select it for their central processing units (CPUs) that complement their AI-specific chips. In addition to Nvidia and Taiwan Semiconductor Manufacturing Company (TSMC), Arm’s customers include well-known consumer brands such as Apple. The automotive industry is also driving demand for Arm-designed chips due to the advancement of self-driving technology. Founded in 1990 by a group of chip designers in Cambridge, Arm was acquired by SoftBank for $32 billion in 2016. However, SoftBank’s plan to sell Arm to Nvidia was abandoned in April 2022 due to regulatory objections. Instead, SoftBank announced its intention to sell shares in Arm on the Nasdaq stock exchange in New York. The rise in Arm’s shares is positive news for SoftBank, which has suffered losses from the declining valuations of some of its investments, including WeWork. SoftBank, which still holds a roughly 90% stake in Arm, has witnessed its own shares increase by almost 30% in the past week.
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