Own ARM stock? This Is the 1 Thing to Watch Now

Arm Holdings (NASDAQ: ARM) has emerged as one of the top semiconductor and artificial intelligence (AI) stocks on the market today. After going public in 2023, the stock soared as investors realized it had more exposure to AI than they initially believed. Today, Arm stock is expensive, trading at a price-to-sales ratio of 38, but it also has a robust set of competitive advantages that set it apart from any other stock in its industry.There are two things that are unique about Arm. First, its business model is distinct from any other tech company. Rather than designing chips, the company licenses its CPU architecture to companies like Apple and Nvidia. It earns revenue when it sells those licenses, and it earns royalty revenue when the products containing those licenses are sold. That gives the company a more resilient revenue stream than most semiconductor companies, and the royalties it earns tend to last for years. It's also led to high margins.The other unique component of Arm's business is its CPU architecture, which is known for being more power-efficient than the competing x86 alternative made by Intel and AMD. That's led to Arm gaining essentially universal adoption in the smartphone market with 99% market share, and it's also made it a popular choice for the rapidly growing data center market, where efficiency is also prized due to the extraordinary energy demand to run AI models.Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool