Why Arm Holdings Stock Soared 224.4% Through The First Half Of 2026
Key Points
Arm Holdings is benefiting from the AI boom's pivot to CPUs.
The company has designed its own computer chip, which it believes can help revenue boom over the next few years.
Shares of Arm look overvalued after soaring so far in 2026.
Shares of Arm Holdings (NASDAQ: ARM) rocketed 224.4% higher in the first half of 2026, according to data from S&P Global Market Intelligence. The computer chip design and licensing firm is poised to benefit greatly from the next phase of the artificial intelligence (AI) boom, driving investor demand for the stock. It is now the 40th-largest company in the world by market cap, valued at $350 billion as of the close on July 9th, 2026.
Here's why Arm Holdings stock has boomed so far in 2026, and whether you should consider buying right now.
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Embracing the future with AI
In the global computer chip supply chain, there is perhaps no greater gap between a company's importance and general awareness than that of Arm Holdings. It designs and licenses chip architectures for central processing units (CPUs) and has built a reputation for energy-efficient smartphone architectures, which is why Apple uses Arm for all of its internal chips.
Now, its CPU architecture is expanding rapidly into a new market: AI. Many AI infrastructure players, such as Meta Platforms and Amazon, have used Arm to design internal CPUs for data centers. It has even designed its own computer chip, the AGI CPU, an energy-efficient CPU that could arrive at the exact right moment as the power bottleneck in AI data centers grows and grows.
Arm's revenue was $4.92 billion in 2026, driven by its royalty and licensing revenue for CPU designs. By 2031, Arm projects it will generate $25 billion in revenue, driven almost entirely by the growth of its new AGI CPU. Direct sales from the chip are expected to be $15 billion five years from now.
Image source: Getty Images.
Should you buy Arm Holdings stock?
The potential for growth at Arm is salivating. It could see a 5x increase in revenue over the next five years, if management's guidance is taken at face value. Investors are anticipating this growth, which has driven up the stock so far in 2026. Arm Holdings is officially a new thematic winner for the AI boom.
That doesn't mean you need to pile into the stock today. Arm management is projecting it will generate $9 in earnings per share (EPS) in 2031. Compared to the current stock price of $334, that would give it a price-to-earnings ratio (P/E) of over 36 five years from now, assuming the company can achieve these aggressive growth targets. At this stock price, investors would do best to avoid buying Arm stock.
Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Arm Holdings, and Meta Platforms. The Motley Fool has a disclosure policy.