Shares in Arm Holdings, the Cambridge-based designer of the processor blueprints used in most of the world's smartphones, jumped 17% on Monday after its chief executive said demand for its chips was "off the charts".
The stock closed at $323, a fifth consecutive day of gains and its sharpest one-day rise since Arm launched its AGI CPU, its first in-house data centre processor, in March.
Rene Haas, the chief executive, told the broadcaster CNBC that he was more confident than ever of beating the $2 billion revenue target Arm has set for the new chip, and that the order pipeline had already grown past that figure.
"Demand is off the charts," he said.
Investors had worried less about whether customers wanted the chip than about whether Arm could build enough of them, which is why the remarks moved the stock so sharply.
The AGI CPU, a processor built for artificial intelligence (AI) workloads, marks a significant change of direction for a company that has historically made its money licensing chip designs to others rather than selling finished silicon itself.
Arm has raised the bar repeatedly, setting the target at $1 billion when it unveiled the chip in March, doubling it to $2 billion in May, and lifting its conviction again over the summer.
Haas has said the data centre business could soon become Arm's largest, helped by design wins at Nvidia, Google, Amazon Web Services and Microsoft.
He tempered the optimism with a warning that supply constraints could last for years, citing shortages of the wafers, substrates and testing capacity needed to turn orders into shipped chips.
The enthusiasm follows full-year results showing revenue up almost 23% to $4.92 billion.
Arm is majority owned by SoftBank, the Japanese technology investment group, and listed on New York's Nasdaq exchange in 2023.
The valuation question
The rally has left the shares well ahead of Wall Street's published expectations, with the average analyst price target near $289, about 11% below Monday's close and barely changed since June.
Others are far more bullish, with the financial data platform TIKR valuing the shares at $1,710 by March 2031 in its own model, implying a return of more than 400%.
That split captures the question hanging over a stock that has more than doubled this year: whether booming demand can outrun the industry's struggle to build enough chips to meet it.
