Rene Haas, the chief executive, notes that the UK-based company is capitalizing on significant demand for AI-powered products and applications
Arm’s shares surged over 50% following increased profit and revenue forecasts, driven by high demand for artificial intelligence technology. This surge valued the UK-based tech company at twice its market capitalization when it went public in September.
The world’s largest supplier of design components for processing chips used in smartphones to gaming consoles saw its shares open 58% higher on the Nasdaq in the US on Thursday.
In a matter of hours, investor excitement drove Arm’s share price to over $122, valuing the company at approximately $120 billion.
This valuation exceeds twice the $51 per share offered when the parent company, Japan’s SoftBank, listed the Cambridge-based business in New York last September, bypassing the UK.
Arm’s chief executive, Rene Haas, stated on Wednesday that the company was capitalizing on the “significant opportunity” arising from the demand from tech companies to launch products and applications supported by AI.
Despite being predominantly owned by SoftBank, which holds 90% of its shares, Arm exceeded analyst predictions by reporting a 14% year-on-year revenue increase to $824 million in the last quarter of the calendar year.
Arm increased its full-year revenue and profit guidance due to growing demand from companies seeking to license its designs for AI applications, as well as a rebound in smartphone sales.
However, Arm’s first quarterly report, released in November, received a less favorable response from investors. This was due to the company disclosing a $500 million payout for remuneration costs following the New York listing, which involved settling outstanding shares previously granted to employees.
Despite the UK government’s intense lobbying efforts, SoftBank’s decision to list in the US was a setback for Rishi Sunak’s aspirations to establish London as the premier destination for tech company flotations.
Before SoftBank’s acquisition for £24.6 billion in 2016, Arm had a dual listing on both sides of the Atlantic and had been a member of the FTSE for 18 years.
The chip designer, which pledged to maintain its headquarters, operations, and “material intellectual property” in the UK, suggested it might contemplate a secondary London listing “in due course.”
