NVIDIA Corporation (NVDA) made a significant move in the last quarter by fully divesting its stake in Arm Holdings plc (ARM), a semiconductor design firm known for its energy-efficient CPU designs. This decision marked the end of a chapter that began with Nvidia’s failed attempt to acquire Arm for $40 billion in 2020.
According to Nvidia’s latest regulatory filing, the company sold its remaining 1.1 million Arm shares, generating approximately $140 million and completely exiting its position by the end of the fourth quarter of 2025. This move has raised questions about Nvidia’s confidence in Arm and whether it presents a buying opportunity for investors.
Arm Holdings, headquartered in the United Kingdom, is a semiconductor and software design company that licenses its processor designs to semiconductor companies and original equipment manufacturers. Despite not manufacturing physical chips, Arm has a market cap of $132.7 billion and is widely recognized for its Armv9 architecture used in billions of devices globally.
Over the past year, ARM stock has faced challenges, with a 16.75% decline driven by concerns about demand, higher memory prices, and competition. However, the stock has shown resilience with a 14.88% year-to-date gain, supported by optimism around Arm’s position in AI-driven computing.
Arm’s third-quarter fiscal 2026 results revealed solid growth, with total revenue reaching a record $1.2 billion, driven by strong demand for its processor designs and intellectual property. Royalty revenue increased by 27% year-over-year to $737 million, while licensing revenue grew by 25% to $505 million.
Looking ahead, Arm’s management expects revenue of approximately $1.47 billion in the fourth quarter of fiscal 2026, with analysts predicting a decline in earnings for the year but a 40% increase in fiscal 2027. Despite some concerns from analysts about near-term challenges, the stock maintains a consensus “Moderate Buy” rating.
The average analyst price target for ARM is $154.27, suggesting a 21.2% upside potential, with a Street-high target of $210 indicating a 65% potential upside. While some analysts have downgraded the stock due to short-term headwinds, the long-term outlook for Arm Holdings remains positive.
In conclusion, Nvidia’s divestment of Arm Holdings may have raised doubts, but the company’s strong performance and long-term growth prospects indicate that Arm could still be a valuable investment opportunity for investors looking to capitalize on the future of AI-driven computing.
