ARM’s Growth Catalysts Outweigh Concerns Related to Antitrust Investigation

At the cusp of a business transition, Arm (ARM) stock has traded exceptionally higher in the last 52 weeks. The rally has also been supported by structural industry tailwinds that have translated into robust growth.

However, amidst the bright outlook, the company is facing new scrutiny. Specifically, Arm is the target of a U.S. antitrust investigation to determine whether its dominant position in the semiconductor licensing industry is being used to disadvantage rivals. Importantly, as the company builds its in-house chip business, the Federal Trade Commission (FTC) is examining whether Arm can unfairly limit or degrade competitors' access to key licenses.

From an investment perspective, this probe increases Arm's regulatory risk. However, it's worth noting that the price action of ARM stock has not been significantly negative, as the positives far outweigh concerns related to the investigation. 

About ARM Stock

Headquartered in the United Kingtom, Arm is a global leader in the semiconductor industry. Its business involves the research, development, and licensing of microprocessors, systems IP, graphics processing units (GPUs), software, and more. 

Since 1990, Arm has shipped more than 350 billion chips, and the company clocked a turnover of $4.9 billion for fiscal 2026. On a year-over-year (YOY) basis, fiscal 2026 revenue growth was robust at 23%. 

In terms of innovation, Arm has commenced production of its AGI CPU, which is its first production silicon; Arm claims that the AGI CPU is one of the world’s most-efficient agentic central processing units. The firm has visibility of over $2 billion in potential demand over the next two years. 

According to Arm, the semiconductor market related to cloud AI, edge AI, and physical AI is poised to be worth $1.5 trillion by 2031. This presents a big opportunity for sustained growth. 

Considering the industry tailwinds, Arm’s leadership position, and healthy top-line growth, ARM stock has trended higher by 94% in the last six months. 

Arm's Transition From a Pure IP Licensor

For Q4 fiscal 2026, Arm reported royalty revenue of $671 million, up 11% year-over-year (YOY), while licensing and other revenue climbed 29% to $819 million. Historically, the company's entire business model has revolved around it being an IP licensor. 

While this remains the core business, Arm is now manufacturing chips that will be designed in-house. Meta Platforms (META) has already been onboarded as a co-development partner. As mentioned earlier, the revenue potential for Arm's in-house CPU is $2 billion over the next 24 months. With this transition, IP, CSS, and silicon will be growth drivers over the next few years. 

Arm expects the AGI CPU business to deliver revenue of $15 billion by fiscal 2031. The company also claims that more than 50 companies are “supporting the expansion of the Arm compute platform into silicon.” These companies include tech giants like Microsoft (MSFT), Nvidia (NVDA), Broadcom (AVGO), Amazon (AMZN), and Marvell Technology (MRVL), among others. 

All told, the outlook for this business transition is promising and will likely create significant value. 

What Do Analysts Say About ARM Stock?

Based on 31 analysts with coverage, ARM stock has a consensus “Moderate Buy” rating. While 20 analysts have a “Strong Buy” rating, three have a “Moderate Buy,” and seven have a “Hold” rating. Among the bears, one analyst also has a “Strong Sell” rating.  

The mean price target of $239.71 represents potential downside of 7% from current levels. However, the most bullish price target of $326 suggests that ARM stock could climb as much as 27% from here.

Conclusion

This is not the first time Arm has been subject to an antitrust investigation. In November 2025, South Korea’s antitrust regulators investigated the company with scrutiny toward its licensing practices, based on a complaint from Qualcomm (QCOM). 

That said, while business risks exist, any uncertainty may already be baked into the stock price. With a fast-growing AI server market, the opportunities remain significant and Arm should continue to create value. 

Analysts expect Arm to grow earnings by 30% in fiscal 2027, followed by a 78% earnings jump in fiscal 2028. With growth acceleration, ARM stock is positioned to remain in an uptrend. 

On the date of publication, Faisal Humayun Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.