AI: UK chip designer Arm sees shares almost double

UK chip designer Arm Holdings has experienced a significant increase in stock market value as investors anticipate growth in the artificial intelligence (AI) industry.


Arm's Stock Market Value Nearly Doubles

Arm Holdings, a chip designer based in Cambridge, UK, has seen its stock market value nearly double in less than a week. This surge comes as investors place their bets on the booming artificial intelligence (AI) industry. The company's recent financial results showed that the demand for AI-related technology is significantly contributing to its sales growth.

Arm is already well-known for designing chips that power almost every smartphone in the world. After being taken private by Japan's SoftBank in 2016, the company returned to the stock market in September last year. Since the release of its earnings report last week, Arm's shares have skyrocketed by over 98%.

Nvidia's Success Drives Growth in AI Industry

The success of chipmaker Nvidia has had a positive impact on the AI industry as well. Over the last year, Nvidia's shares have more than tripled in value due to the soaring demand for its AI chips. This trend has resulted in Nvidia becoming one of the most valuable publicly-traded companies in the world, with a stock market valuation of approximately $1.8 trillion (£1.4 trillion).

Nvidia's achievement also highlights its inclusion in the "Trillion-dollar club," along with tech giants Apple, Microsoft, Alphabet, and Amazon. Although Arm's technology is not directly used for AI work, chip makers like Nvidia rely on Arm's central processing units (CPUs) to complement their AI-specific chips. Arm's customer base also includes well-known consumer brands such as Apple.

Arm's Growing Importance in the AI Industry

Arm's influence in the AI industry extends beyond smartphone technology. The demand for Arm-designed chips is also expanding in the automotive sector due to advancements in self-driving technology. As companies develop and incorporate AI systems in their vehicles, the need for high-performing chips increases, giving Arm a significant opportunity for growth.

Founded in 1990 by a group of chip designers in Cambridge, Arm was acquired by SoftBank for $32 billion in 2016. However, SoftBank's plans to sell Arm to Nvidia were put on hold in April 2022 due to regulatory objections. Instead, SoftBank decided to sell shares in Arm on the Nasdaq stock exchange in New York. The recent surge in Arm's shares is positive news for SoftBank, as it has faced losses from declining valuations in some of its investments.