After holding its initial public offering earlier this year, chip leader Arm Holdings (ARM) now stands as Investor’s Business Daily’s IPO Stock Of The Week. Arm has been flirting with a buy zone since mid-June and cruised through it Friday with a large gain.
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Arm stock is on Investor’s Business Daily’s IPO Leaders screen and is one of the best stocks to watch. It uses artificial intelligence technology to develop advanced chip designs and software tools used in smartphones, autos and data centers.
Its chip designs are used by every major semiconductor maker, including Apple (AAPL), Qualcomm (QCOM), Nvidia (NVDA) and many more. Arm also provides basic designs for the semiconductors produced by its clients. Chipmakers customize and build on those blueprints.
Arm is focused on four business segments: client, automotive, data center and Internet of Things. Currently, its biggest end markets are mobile devices and consumer electronics.
Arm Stock: Earnings Beat Views
On May 8, Arm topped fiscal fourth-quarter earnings and sales expectations and gave a current quarter profit outlook that topped estimates. But its full-year sales forecast came up short of views. The estimate from analysts polled by FactSet calls for 43% profit growth in the current quarter, with a 34% expected rise in sales.
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Wall Street expects the company’s earnings to rise 24% this year, followed by another 32% gain in 2025, according to FactSet. That accelerating earnings growth, along with the IPO stock’s exemplary price action, translates to a best-possible 99 IBD Composite Rating, according to the IBD Stock Checkup. It also has a 99 Relative Strength Rating, which gauges a stock’s performance relative to the rest of the market.
After dancing in and out of the buy zone since June 14, Arm stock moved back above a 164 buy point from a deep consolidation on Wednesday, per IBD MarketSurge pattern recognition. Shares leapt Friday, set to close above the 5% buy area that tops out at 172.20.
Meanwhile, the stock’s relative strength line is at new highs, reiterating Arm stock as a market leader. Its relative strength line should hit a new high on the breakout day or shortly thereafter.
With IBD’s recommended exposure range from 80%-100%, investors have the ability to buy breakouts among stock market leaders.
Follow Scott Lehtonen on X, formerly known as Twitter, at @IBD_SLehtonen for more on Arm stock, the stock market and top stocks to watch.
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