UBS Arm Holdings PLC (ARM.US): ARM AGI CPU Backlog Doubles in 6 Weeks
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UBS reports a dramatic doubling of Arm's AGI CPU backlog over a mere six weeks, surging from $30 billion to $60 billion. This explosive growth highlights intense AI data center demand, primarily propelled by hyperscale customers who account for over 70% of the total backlog. Driven by this robust demand momentum, UBS maintains a Buy rating on Arm Holdings with a target price of $180, derived from a 50x price-to-earnings multiple applied to the 2026 estimated EPS. The research notes that Arm's market share in AI inference is steadily expanding, rising from 15% in 2024 to 25% in 2025. Furthermore, a strategic transition in its licensing model, shifting from upfront fees toward per-chip royalty arrangements, is anticipated to enhance revenue per chip by roughly 30%. Arm's v9 architecture currently delivers a 40% performance lead over competing x86 alternatives, reinforcing its competitive moat. Major technology conglomerates, including AWS, Microsoft, and Google, are aggressively adopting Arm-based architectures for their infrastructure needs. UBS projects fiscal 2026 revenue growth of 25%, easily outpacing broader market expectations. The broader data center CPU total addressable market is forecasted to reach $40 billion by 2028. Key validation points include continued backlog conversion and successful penetration across new hyperscale accounts.
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