Citi: Continues to View Arm as Major AI Infrastructure Beneficiary, PT $300

On July 30, Citi released a research report stating that Arm reported its fiscal first-quarter 2027 results, with revenue and earnings beating market expectations by 1% and 11%, respectively. The midpoints of its fiscal second-quarter revenue and earnings guidance were 3% and 10% above forecasts, respectively. The firm noted strong growth in cloud AI and licensing businesses, which helped offset the impact of weaker demand and product mix changes in the smartphone market. Citi raised its fiscal 2027 revenue and operating profit forecasts by 1% and 4%, respectively. Management mentioned that demand for general artificial intelligence (AGI) CPUs has exceeded $2 billion, and business visibility is improving. Therefore, Citi continues to view Arm as a major beneficiary of AI infrastructure, believing that the recent stock price pullback will provide a more attractive entry point. It maintains a 'Buy' rating with a target price of $300. Citi increased its revenue forecasts for Arm's fiscal 2027 to 2030 by approximately 1%, reflecting strong licensing business, partially offset by weaker smartphone royalty revenue. Earnings forecasts for fiscal 2027 and 2029 were raised by 4% and 1%, respectively.