Arm initiated with bullish view at UBS, here’s why

UBS initiated coverage of Arm with a Buy rating and $160 price target, which represents 20% upside. Artificial intelligence is driving positive growth vectors across all of Arm’s key end markets, with data center “particularly fertile ground” as the customer base for its intelligence property licenses expands and cloud customers push for more power optimized CPU architectures, the analyst tells investors in a research note. The firm says that even in smartphone where Arm’s penetration is already very high, it should still outgrow the market as royalty rates move higher and the processor grows as a portion of phone cost.