ARM Holding – The Picks-and-Shovels Play For Next Decade of Compute
Here's my Deep Dive into ARM - the chip company that doesn’t make chips but still powers almost half of all our electronics!
If you’ve ever scrolled on your phone, streamed on a tablet, or shouted at a smart speaker, chances are you’ve used Arm technology without realizing it. In fact, it’s almost impossible not to: more than 99% of the world’s smartphones run on Arm-based processors, and over 325 billion Arm-powered chips have shipped to date.
Yet Arm doesn’t manufacture a single semiconductor. Instead, it quietly sits behind the scenes, licensing the blueprints that power modern computing.
That low-profile, royalty-driven model has made Arm one of the most quietly dominant and profitable players in tech. It collects a small cut on billions of chips every year, from iPhones to data-center servers, without the headache (or expense) of running fabs. Think of it as the “picks-and-shovels” play for the digital economy — only instead of gold miners, the customers are Apple, Qualcomm, Amazon, Nvidia, and just about everyone else.
Today, Arm is no longer just the king of mobile. It’s moving aggressively into PCs, data centers, automotive, and edge AI, markets that could reshape its growth trajectory for the next decade. Investors love the story (and have bid up the stock accordingly), but the key question is: does the business live up to the hype, and is the price worth paying?
Let’s find out – this is my ARM Deep Dive!
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This is Arm — the chip company that doesn’t make chips.
Business fundamentals
Founded in 1990 as a joint venture between Acorn Computers, Apple, and VLSI Technology and having gone public in 2023 after spinning out of Softbank, which still owns 87% of its shares, ARM Holdings is a British semiconductor and software design company best known for developing the ARM architecture - the foundation of most of the world’s mobile and embedded computing - which has allowed it to become one of the most influential players in the semiconductor industry.
Today, ARM’s technology underpins billions of devices shipped each year. Here are some mind-blowing stats:
More than 99 percent of the world’s smartphones use ARM-based processors - nearly all smartphones use at least one ARM-based processor.
More than 325 billion ARM-based devices have been shipped to date.
ARM claims that “more than one-third of all chips with processors are ARM-based.”
A reasonable estimate is that 30-40% of all (processor-containing) electronics globally are ARM-based. If you include simpler embedded devices (microcontrollers, IoT gear, etc.), the share may be even higher.
Yet, ARM doesn’t actually produce a single chip (semiconductor) itself. You see, rather than manufacturing chips itself, ARM licenses its processor designs and intellectual property to a wide range of semiconductor companies, device makers, and cloud providers. This licensing-based model has allowed the company to achieve broad adoption across smartphones, tablets, wearables, automotive systems, and increasingly in data centers and artificial intelligence applications.
So, in simple terms, Arm provides the Lego blocks and the universal rules of assembly that let hundreds of different companies build their own custom processors. Without ARM, most would either need to invent their own architecture — expensive and risky — or settle for off-the-shelf chips with little differentiation.
And ARM isn’t just any player, but the leader in semiconductor IP, commanding a 41% market share, driven by ARM’s unique and early focus on reduced instruction set computing (RISC), which emphasizes power efficiency, making its designs particularly suited for mobile devices and other energy-constrained environments, which is how ARM differentiates itself – it’s all about its technological edge in power efficiency, which is becoming increasingly important, particularly in the age of cloud infrastructure, automotive autonomy, and edge AI.
The result? ARM finds itself as a critical enabler of the digital economy and technologies of the future, growing its presence all around with superior designs (in most use cases).
On that note, let’s break down how ARM actually generates revenues.
In simple terms, ARM generates revenue by designing chip blueprints and then charging other companies to utilize those blueprints. As I mentioned, it doesn’t manufacture or sell chips itself. Through this strategy, revenue comes in two main ways.
First, license fees: when a company like Apple, Qualcomm, or Samsung wants to use ARM’s designs or instruction set, it pays an upfront fee to access the designs and instruction set.
Second, royalties: once a licensed chip goes into production, Arm collects a percentage of every unit sold. So, every iPhone, every Android phone, every smart TV, or every car computer that ships with an Arm-based processor sends a small payment back to Arm, which is just a straight-up brilliant business model.
Now, ARM charges only a minimal royalty, around 1–2% of the chip’s selling price. That means if a smartphone SoC sells for $30, Arm might collect $0.30–$0.60 per chip. Yet, because billions of chips using Arm technology are sold each year, those small royalties add up to a vast, recurring revenue stream. More advanced designs also increase the royalty per device, so Arm benefits even when unit volumes are flat.
In short, license fees deliver upfront cash and design wins, while royalties create sticky, long-term revenue tied to global electronics shipments. It’s a capital-light, highly scalable model.
You won’t find business models much better than this one, believe me!
As of today, ARM is estimated to have about 260 licensees, or companies that have taken out licenses to use ARM’s IP. This set includes virtually every major semiconductor player, from Qualcomm, MediaTek, and Samsung to Nvidia, Broadcom, and Apple, as well as cloud providers such as Amazon, Google, and Microsoft, which design their own chips.
All of these use ARM IP in their processor designs.
Take these prominent ARM customer examples:
Apple -> its M-series and A-series processors in Mac and iPhone are ARM-based.
Qualcomm -> Snapdragon SoCs for Android smartphones, automotive platforms, and upcoming PC processors are ARM-based
Samsung -> Exynos processors in Galaxy devices, plus ARM CPU/GPU IP integrated in memory controllers and consumer electronics – all ARM-based.
Nvidia -> Uses ARM cores in GPUs, networking processors, and the Grace CPU for data centers.
Amazon -> Graviton CPUs for cloud instances, Nitro system controllers – ARM-based
Broadcom -> Networking and broadband processors, custom ASICs, also ARM-based.
I think the idea is pretty clear by now…
ARM doesn’t manufacture chips, but its designs sit at the heart of modern computing. With billions of devices running on its IP and nearly every major tech company as a customer, its reach is unmatched. Small royalties, multiplied across massive volumes, translate into sticky recurring revenue - a rare and powerful business model.
Building on this theoretical foundation, let’s break the company down a bit further.
A bit more on this licensing model and its brilliance…
What makes Arm’s licensing model so effective is the way it compounds over time. Chipmakers gain access to proven, cutting-edge CPU designs without having to develop an instruction set from scratch, which would require years and billions of dollars in R&D.
In return, Arm collects not only an upfront license fee but also ongoing royalties on every chip shipped. And since those royalties scale with the vast volumes of consumer electronics sold worldwide, Arm’s reach and revenue base are both broad and resilient.
Over time, this dynamic has been reinforced by ecosystem lock-in. With over three decades of history, Arm has established one of the largest developer and partner ecosystems in the technology industry, probably only behind x86. Operating systems like iOS and Android, along with countless applications, are optimized for ARM processors. For device makers, this dramatically lowers the barrier to adopting Arm, making switching away prohibitively costly, as it would require major software redevelopment and ecosystem disruption.
The model is also brilliant because of what Arm doesn’t do. Unlike Intel or AMD, it doesn’t own fabs, manage supply chains, or deal with the risks of production cycles. By focusing solely on intellectual property, Arm avoids capital intensity and stays structurally higher-margin than most chipmakers. Once a core design is complete, it can be licensed to dozens of companies across various industries, with royalties flowing every time those chips are sold, which can continue for decades. That makes Arm’s revenue stream not just scalable, but recurring and tied to global electronics demand as a whole rather than to any single product cycle.
Neutrality adds another layer of strength. Because Arm doesn’t compete with its licensees, it can work with everyone. Apple, Qualcomm, Samsung, Nvidia, Amazon, and many others rely on its IP, all customizing it in different ways but benefiting from the same instruction set. For developers, this means writing software once for Arm and seeing it run on billions of devices, reinforcing a self-sustaining ecosystem.
Finally, the breadth of Arm’s markets - smartphones, PCs, automotive, IoT, networking, servers, and AI - provides diversification few semiconductor companies can match. These advantages enable it to focus on innovation, expand its instruction set, enhance efficiency, and incorporate features for AI and security, while outsourcing costly manufacturing to its partners.
In short, Arm’s licensing model delivers capital-light scalability, high margins, neutrality, diversification, and relentless innovation. It’s this combination that explains why Arm technology has become embedded in nearly every corner of the digital economy.
Growth drivers
Arm’s growth today is being propelled by several converging forces: the shift in computing toward efficiency, the rise of AI, diversification beyond smartphones, and growing support from both ecosystems and OEMs. Taken together, these factors position Arm not just as a beneficiary of market expansion but as a share gainer in some of the largest segments of the semiconductor industry.
One of the most visible growth stories is in the PC market. Arm-based processors, once a niche presence, now account for nearly 14% of all notebooks and desktops sold, with a share of around 18% in laptops specifically. TechInsights projects that by 2029, Arm’s share of the notebook market will more than double to over 40%, with revenue share surpassing 50%.
Apple proved with its M-series chips that Arm can deliver all-day battery life and superior performance per watt, forcing the industry to take notice. Microsoft is now fully backing “Windows on Arm,” while Qualcomm, MediaTek, Samsung, and Lenovo are rolling out Arm-based laptops. As software compatibility matures and more OEMs adopt the platform, Arm’s trajectory in PCs appears set to mirror its earlier dominance in smartphones, presenting a massive growth opportunity.
Simply put, ARM is poised to dominate the x86 market in PCs by the end of the decade, driven by shifts in technology toward energy efficiency and AI.
The data center represents another transformative opportunity. Hyperscalers such as Amazon, Microsoft, and Google are adopting Arm-based CPUs because power efficiency has become as important as raw compute. Data centers consume staggering amounts of electricity, and Arm’s performance-per-watt advantage translates directly into lower costs and improved sustainability.
Amazon’s Graviton processors already deliver up to 40% better price-performance than comparable x86 instances, and Nvidia’s Grace Blackwell is 25x more energy efficient than the previous x86-based system.
As a result of this growing technological dominance and increasing focus on energy efficiency, ARM has set an ambitious target of capturing ~50% of the data center CPU sales by the end of this year, up from ~15% in 2024. While that goal may be optimistic, momentum is undeniable: Arm is now a credible competitor to Intel and AMD in servers, an area once thought untouchable.
The automotive sector is a third primary growth driver. Today, Arm powers infotainment and digital dashboards, but its real upside lies in advanced driver-assistance systems (ADAS) and autonomous driving, both of which demand high-performance CPUs, GPUs, and accelerators. As vehicles evolve into “computers on wheels,” ARM’s content per car is rising sharply. Electric vehicles, in particular, magnify this need, as efficiency and computing density are critical for extending battery range while enabling advanced software-driven features.
Finally, artificial intelligence cuts across all of these markets as a secular tailwind. On the edge, in smartphones, wearables, IoT devices, and vehicles, Arm CPUs, GPUs, and NPUs are increasingly handling on-device AI inference, running tasks such as voice recognition or image processing locally to reduce latency and preserve privacy. In the cloud, Arm’s Neoverse platform is being deployed for inference and general-purpose compute, complementing the GPU-heavy world of AI training. As AI adoption accelerates, Arm benefits both at the edge and in data centers, reinforcing its position as the architecture of choice for energy-efficient, scalable AI workloads.
All told, Arm’s growth is no longer just about smartphones. Mobile remains a cash cow, but the real upside lies in PCs, cloud, automotive, AI, and IoT. Analysts currently expect Arm to grow revenues at around a 20–22% CAGR through 2030, significantly faster than the broader semiconductor industry’s ~8% projected CAGR. If Arm executes well in data centers and the automotive sector, growth could skew higher, reaching into the mid-20s. Even under more conservative assumptions, Arm is set to expand meaningfully faster than the sector, thanks to its unique position at the intersection of efficiency, scalability, and ecosystem entrenchment.
Simply put, a combination of market share gains in key growth markets and healthy growth in these same markets results in a terrific growth outlook, with revenue growth almost certainly remaining over 20% through 2030.
Does ARM have a moat?
To answer the question immediately: Yes, ARM has a massive moat. Its competitive strength isn’t just one factor but a layered combination of technology, business model, and ecosystem effects that make it unusually hard to replace.
At the heart of the moat is ecosystem lock-in. Over 350 billion Arm-based chips have shipped, and nearly every smartphone, most IoT devices, and a growing share of PCs and servers run on Arm. This installed base is enormous, and with it comes a software world - operating systems, compilers, apps, and developer tools - all optimized for Arm. For chipmakers or OEMs, walking away would mean rewriting software stacks, retraining engineers, and risking compatibility. That creates high switching costs and makes ARM the “default” in many markets, operating as a duopoly with x86 (AMD and Intel) in most cases.
This alone already gives it a massive moat.
Another factor contributing to its moat is superior technology and brilliant positioning. Arm’s architecture was designed around performance per watt, and that focus has only become more valuable as computing collides with energy and thermal constraints. Whether it’s maximizing smartphone battery life, extending EV range, or lowering data-center energy bills, efficiency is now a competitive necessity. x86 rivals like Intel and AMD can’t easily shed decades of legacy design, and while RISC-V holds long-term promise, it lacks the maturity, ecosystem, and global adoption of ARM.
Additionally, the business model itself adds defensibility. Arm doesn’t manufacture chips; it licenses IP. That neutrality enables it to collaborate with virtually every major semiconductor player, without competing against them. For customers, the deal is sticky: once a chip is designed on Arm, royalties continue to flow for years, sometimes more than a decade, in automotive or industrial markets. This creates recurring, diversified revenue streams that resemble a software subscription model more closely than a typical semiconductor business.
Taken together, Arm’s moat rests on ecosystem entrenchment, efficiency leadership, customer neutrality, and platform scalability. It isn’t invulnerable, as x86 still dominates legacy enterprise workloads, and RISC-V is a credible long-term alternative; however, in most of its core and emerging markets, Arm enjoys durable advantages that make displacement extremely difficult.
Financial and performance review
ARM released its latest financial results (fiscal Q1) in late July and delivered solid numbers, although far from impressive. Combine that with a cautious outlook and guidance for higher spending ahead, and it puts pressure on its share price, especially with these priced for perfection.
At the same time, ARM is off to a strong start in its fiscal year 26, showing good momentum, reporting a new all-time high Q1 revenue – its second-highest number ever – and healthy margins and cash flows.
Jumping straight into the numbers, ARM reported a quarterly revenue of $1.05 billion, just short of a $1.06 billion consensus, just ahead of management’s guidance, and up 12% YoY. Please note that ARM’s growth tends to fluctuate considerably from quarter to quarter due to the timing and size of multiple high-value license agreements, as well as contributions from the backlog.
Driving this solid growth in Q1 was primarily incredible AI-related demand, as AI workloads are being deployed everywhere, leading to considerable growth in computing demand, particularly for energy-efficient compute, which is where ARM shines.
Breaking down revenue further, royalty revenue was $585 million, accounting for just over 50% of total revenue and up 25% YoY, with healthy demand across all end markets. An especially strong driver of this was outstanding growth in ARM’s smartphone end-market, where ARM outpaced the market due to the continued uptake of flagship smartphones based on ARMv9 and CSS.
Furthermore, licensing revenue was $468 million, down 1% YoY as it laps a robust Q1 last year, somewhat offset by AI-driven design wins. Once again, licensing revenue, in particular, varies from quarter to quarter due to normal fluctuations, which is why it’s much more valuable to look at its ACV (annualized contract value) to gauge licensing business momentum.
For reference, when a company licenses ARM’s IP, it typically signs a multi-year contract that includes upfront payments and, in some cases, staged milestone payments. ACV takes those multi-year deals and expresses them as the average revenue per year, giving investors a clearer sense of how much new business Arm is adding on a recurring basis. It’s a way of normalizing highly variable license revenues, which can otherwise be lumpy from quarter to quarter, depending on when large contracts are signed.
So, while royalties are tied to the number of chips shipped each year, ACV is a forward-looking indicator of licensing momentum. A rising ACV suggests that more companies are committing to adopting Arm’s IP, which in turn creates future royalty streams once those chips go into production.
In Q1, ACV was up 28% YoY, showing remarkable growth, as this generally sits in the mid-teens, as shown in the graph below. This number is well ahead of its recent run rate and management’s long-term expectations for mid- to high double-digit license growth, driven by large licensing deals signed with a leading smartphone OEM and Softbank.
Although management expects this quarter to be a standout, it is still maintaining its long-term view of licensing growth in the mid-to-high double digits, which remains excellent, considering the importance of these deal wins for long-term revenue growth.
Furthermore, RPO or remaining performance obligations remained flat sequentially, as new licensing deals offset revenue recognized from licenses signed in prior quarters.
In addition to the large deals signed with Softbank and a smartphone OEM, excellent AI momentum continues to drive growth, as ARM plays an increasingly important role in AI applications. Over 70,000 enterprises now run AI workloads on ARM Neoverse datacenter chips, up 40% YoY and 14x since 2021, as ARM has been rapidly gaining share and overall demand has exploded. Its customer list includes industry leaders such as NVIDIA Grace, AWS Graviton, Google Axion, and Microsoft Cobalt.
And ARM isn’t just reaping the benefits in the datacenters but also on the edge, with its “Ethos-U85 NPU for an enhanced image recognition, and its v9 CPUs with a scalable matrix extensions for accelerating language models,” to quote management. These innovations have already been adopted by edge technology leaders such as Apple, Samsung, and MediaTek.
This combination of AI exposure is translating into excellent growth and demand for ARM IP.
Finally, a quick note on geographical and customer exposure, which also looks promising for ARM. First of all, ARM isn’t overly reliant on any single region, deriving 41% of revenues from the U.S., followed by China at 25%.
In terms of customer concentration, the story remains essentially the same. On paper, ARM’s largest customer is ARM China, which holds the exclusive rights to distribute ARM IP in China, accounting for roughly 25% of its revenue. Beyond this, revenue is well split among roughly 260 licensees, of which Apple contributes the most, at approximately 5% of revenue, which is relatively limited exposure.
So, safe to say ARM isn’t overly reliant on any one customer or region, which is excellent in terms of risk management and revenue stability.
On that note, let’s move to the bottom line, where ARM’s licensing model shines.
You see, unlike Intel or AMD, which must invest tens of billions of dollars into fabs, equipment, and chip inventories, Arm doesn’t produce semiconductors itself. Its “product” is intellectual property. That means R&D is the main expense, not factories or physical production. Furthermore, because each incremental chip shipped generates revenue for Arm with essentially no additional cost, its gross margins are very high, typically above 90%. Operating margins are also structurally higher than those of most semiconductor companies, as Arm’s costs are weighted toward design and ecosystem support rather than capital-intensive operations.
And this is all clearly reflected in the numbers. ARM’s gross margin has been above 96% since its initial public offering and has remained over 97% since its fiscal Q4 2024. In Q1, ARM reported a gross margin of 97.9%, up 50 bps YoY.
On the cost front, ARM is ramping up its R&D investments to capitalize on the opportunities and technological shifts at hand. As a result, R&D costs were up 34% YoY in Q1, which led to 26% growth in operating expenses, outgrowing revenue and putting some pressure on margins.
Down the line, this resulted in an operating income of $412 million, which translates into an operating margin of 39.1%, down 860 bps YoY amid these higher investments. Of course, this margin drop isn’t ideal, but I don’t mind it too much, as it allows ARM to maximize the AI opportunity through higher R&D investments – that’s the nature of the industry. And besides, its operating margin at 39% is still substantial!
Further down the line, ARM reported a non-GAAP EPS of $0.35, in line with consensus estimates and down 13% YoY. And finally, TTM FCF was $597 million.
As for financial health, ARM appears to be in excellent shape. The company ended the quarter with $2.9 billion in cash and just $400 million in debt, leaving it in an excellent net cash position with ample liquidity on hand.
On that note, let’s discuss the outlook!
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Outlook & Valuation
As I mentioned earlier, management’s guidance on the Q1 earnings call was somewhat underwhelming, failing to impress investors and sending shares down 8% after hours.
For Q2, ARM now guides for revenue of between $1.01 billion and $1.11 billion, which, at the midpoint, reflects 25% YoY growth but only matches consensus estimates. This includes the expectation that both royalties and licensing revenue will remain flat on a sequential basis. Meanwhile, similar to Q1, ARM will continue to heavily invest in R&D, likely leading to faster growth in operating expenses, which will put pressure on EPS. Management now projects an EPS range of $0.29 to $0.37, which, at the midpoint, falls short of the $0.35 consensus.
Positively, while the near-term outlook might not be impressive, ARM’s longer-term outlook remains excellent. As discussed previously, I believe it’s fair to expect this business to deliver low-to-mid twenties revenue growth through 2030, thanks to its brilliant exposure to growth markets, superior technology, and a sublime business model. This should enable mid-to-high double-digit growth in licensing revenue and mid-to-high twenties growth in royalty revenue.
Additionally, ARM shouldn’t feel a significant impact from tariffs or macroeconomic headwinds. Yes, visibility, especially for royalty revenue, is down a bit, but historically, companies continue to invest in chip development during cyclical slowdowns, so licensing revenue should hold up nicely.
As for my projections, I anticipate revenue growth in the current fiscal year to be somewhat light amid some macro headwinds, coming in at 19.4%. Meanwhile, EPS growth is expected to be close to flat due to significantly higher R&D investments, which are pressuring margins.
Looking beyond the current fiscal year, I expect growth to accelerate in FY27, driven by very strong AI-related demand and faster growth in the underlying industries, amid improved macroeconomic conditions. Furthermore, I now expect this low-twenties growth to hold up through fiscal year 29, as ARM should fully benefit from the growing focus on energy efficiency and its rapidly increasing share in the PC and data center markets.
Meanwhile, profit growth is expected to improve considerably in FY27, although I anticipate some continued headwinds from high R&D spending. In FY28 and FY29, I expect the EPS recovery to hold up amid easing growth in costs and faster revenue growth.
These assumptions are reflected in the financial estimates below.
That then brings us to valuation, and this is where it gets particularly tricky, as ARM shares have been almost consistently trading at very demanding valuation multiples since its initial public offering. Here are the multiples we are looking at today, with shares 20% shy of their all-time high, up 10% over the last twelve months, and up 24% YTD (based on a share price of $153):
93x this year’s earnings and 72x next year’s earnings.
A growth-adjusted PEG of 3.2x
Now, without a doubt, Arm deserves a very high earnings multiple. The company combines a capital-light, royalty-driven model with gross margins exceeding 90%, sticky recurring revenues, and secular tailwinds across cloud, AI, PCs, automotive, and IoT. Very few businesses in semiconductors, or even in technology more broadly, can match that combination of structural advantages and growth prospects.
That said, valuation is where investors need to tread carefully. At ~93x this year’s earnings and ~72x next year’s, Arm is priced not just for strong growth but for near-flawless execution. The PEG ratio of 3.2x indicates that, even after adjusting for the expected 20–25% growth, the stock retains a significant premium compared to its peers. For comparison, leading semiconductor names like Nvidia, AMD, and Broadcom typically trade on PEGs of 1.5–2.0x, and even software-like businesses, such as Synopsys or Cadence (which also run high-margin IP licensing models), trade on lower multiples.
The bullish case is straightforward: if Arm delivers on its ambition to capture 40–50% of the notebook market, continue expanding in servers, and grow its automotive and IoT footprint, today’s valuation could be justified by accelerating earnings power later this decade. In such a scenario, the current multiples may compress, but the absolute share price could still move higher as earnings compound.
The base case, however, is that the market has already priced in much of this optimism. Any stumble, whether it’s the slower adoption of Windows on Arm, pushback from hyperscalers, or faster-than-expected competition from RISC-V, could put pressure on the premium. With semiconductors being cyclical and end markets like smartphones already mature, Arm’s path to sustaining growth of 20% or more every year is not risk-free.
In short, Arm’s valuation reflects its unique moat and secular growth story, but it also leaves little margin for error. This makes it a stock where long-term investors may need to balance their conviction in the business with caution when entering.
For reference, I believe that assuming a 65x fiscal FY28 exit multiple is the absolute most one should be willing to pay for ARM shares. Even when assuming this multiple and using my current EPS estimate, I calculate a share price of “only” $184. From a current share price of $153, this reflects potential annualized returns of just 7%, which isn’t a favorable risk-reward at all.
Long story short, ARM shares are currently priced for perfection, which is too hefty for my taste, as it does not represent a favorable risk-reward balance. Personally, I believe ARM shares become much more compelling below $130 per share, which is roughly a 15% decline from today’s levels.
Until then, I remain on the sidelines. This is a fantastic business and one I would love to own for the decade(s) ahead, but only at the right price!
Rating: Hold - Accumulate below $130
Fiscal FY28 Target Price: $184
Implied CAGR from the current price: ~7%
Please leave a like if you enjoyed this post and found it valuable!
How strong is the IP moat in this area? I used to work in pharma where patents expired after a defined period and the price of the branded medicine fell of a cliff when cheap generics launched. Is it the same for Arm?
Great post, thank you! I agree with your valuation comments. I'm trying to understand why Coatue is so bullish on ARM, forecasting almost a 40% IRR through 2030.