Arm Holdings plc American Depositary Shares (ARM)

FairStock Score: 50/100 — MIXED

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

I approach Arm as a licensor of semiconductor intellectual property, not a manufacturer. The business earns royalties and license fees from CPU, GPU, system IP, and compute subsystems, and it employed 9,584 people at last count. The latest reported quarter, fiscal Q2 2026, showed revenue of $1.3 billion and net income of $270.0 million, a 20.95% net margin. The supplied data indicate strong revenue and profit growth, though no multi-year filing history is given to confirm durability. The balance sheet looks conservative, with debt-to-equity of 0.06, and an Altman Z-Score of 52.57 suggests low bankruptcy risk. Free cash flow is $1.5 billion on a trailing basis. But the price on 2026-10-13 was $255.39, a $219.4 billion market capitalization. FairStock calculations show a P/E of 257.97, P/B of 31.61, EV/EBITDA of 187.51, PEG of 2.40, and FCF yield of only 0.7%. Graham Number is $13.42, implying a margin of safety of -1803.06%. Return on equity is 13.35% and ROCE is 5.42%, hardly exceptional against such multiples. Piotroski F-Score is 4/9, beta is 3.89, and the 52-week range of $100.02 to $452.70 shows violent price swings. The FairStock Score is 50/100. The computed Peter Lynch category is none, because there are only 0 years of filed results, not the three required. Arm may possess a valuable IP ecosystem, but the price already assumes enormous future success. As Graham would insist, the margin of safety is absent. I see a fine business with a speculative price.

In plain English: Arm designs and licenses chip technology, including processor, graphics, and related software, that other companies build into their products. The business is profitable, growing, and carries little debt, but the stock trades at a very high price compared with its earnings, accounting value, and cash flow. Versus the numbers shown, the price looks expensive.

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Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer