Prediction: Arm Holdings will be worth more than Palantir Technologies by the end of 2025

In 2024, Palantir Technologies became one of the best-performing stocks in the S&P 500 Index. Its shares soared 340% last year as investor enthusiasm surged as demand for its artificial intelligence platform surged. Currently, Palantir’s market value has reached US$181.9 billion. However, I believe that by 2025, semiconductor company Arm Holdings (market cap $148 billion) has the potential to surpass Palantir and become the next leader in AI..

What does this mean for?

What does this mean for?

For Arm to have a market capitalization of $182 billion, its stock price would need to rise 23%, or $174 per share. I believe that 2025 may witness the realization of this goal as the demand for energy-efficient AI infrastructure grows. Here are the price targets given by several Wall Street analysts that also support this prediction:

• Morgan Stanley analyst Lee Simpson: $175 per sh
• Evercore analyst Mark Lipacis: $176 per share
• Vivek Arya, Bank of America analyst: $180 per share
• Loop Capital analyst Ananda Baruah: $180 per share

Key factors investors need to know about Arm Holdings

Key factors investors need to know about Arm Holdings

Arm is a major player in the global smartphone and data center markets. Unlike traditional semiconductor companies, Arm does not sell chips directly, but designs the central processing unit (CPU) architecture and licenses intellectual property (IP) to customers. Customers use the IP to design custom chips, and Arm earns revenue through licensing and royalties per chip unit.

Arm also provides related technologies such as system IP and software development tools to help engineers integrate CPU, GPU, memory and other hardware to design systems based on Arm architecture. In addition, Arm's development tools simplify the application of chips based on Arm architecture in the fields of AI, robotics and scientific computing.

Arm's chips have been favored for being more energy efficient than Intel and AMD processors based on the x86 architecture. Historically, Arm chips have been widely used in mobile devices, especially in the field of smartphones, accounting for 99% of the market share. However, as performance continues to improve, Arm's market share in the data center is also gradually growing, having increased by 6 percentage points in the past two years.

Not only that, the world's three major public cloud service providers - Amazon AWS, Google Cloud and Microsoft Azure - have all designed custom chips based on Arm architecture for their data centers. Arm CEO Rene Haas also pointed out: "The world's top ten hyperscale companies are developing and deploying chips based on the Arm architecture." A typical example is Nvidia's Grace-Blackwell super chip, which pairs Nvidia's GPU with Arm's CPU . Nvidia CEO Jen-Hsun Huang said that the Blackwell platform is expected to be one of the most successful products in the company's history, which bodes well for Arm because Arm can collect patent fees on each chip.

Arm shares are expensive, but Wall Street may be underestimating its growth potential

Arm shares are expensive, but Wall Street may be underestimating its growth potential

Overall, Arm's chips have become the standard in the smartphone industry and are expanding into emerging markets such as data centers. As companies increase their investment in artificial intelligence, Arm is expected to benefit. AI systems often require large amounts of power, so Arm's energy-efficient chips may be ideal for reducing costs.

Arm's annual adjusted earnings growth is expected to reach 33% in fiscal 2027, according to Wall Street consensus estimates. While that makes its current adjusted price-to-earnings ratio of 104 times look expensive, Wall Street may be underestimating its growth potential given Arm's performance in recent years has exceeded expectations.

If Arm's earnings grow in line with expectations and continue to grow 33% over the next four fiscal quarters, its stock price could rise 23% to $174 per share by the end of 2025, with a market value of more than $182 billion, surpassing Palantir's Market value of US$181.9 billion.

However, if Arm performs better than market expectations, its stock price could rise even further. In fact, a bull market scenario proposed by Morgan Stanley analysts predicts that Arm's stock price could reach $300 per share by the end of 2025, which would represent a 112% increase in the share price.

Before investing in Arm Holdings, understand the most important AI trends of 2025

Before investing in Arm Holdings, understand the most important AI trends of 2025

From Bezos to Zuckerberg to OpenAI CEO Sam Altman, almost all technology tycoons are talking about the future of AI. Experts predict that after the development of artificial intelligence enters the "third wave", it may bring a 27-fold return on investment.

Time is running out, and industry regulators agree that an artificial intelligence breakthrough called "Operator" is imminent. This breakthrough may not only mark the official start of the "third wave" of artificial intelligence, but industry insiders have privately stated that "Operator" may completely change everything. Investors must not miss this historic opportunity!