Shares in British chip designer Arm Holdings went parabolic following its recent earnings report, doubling in three trading sessions.
Arm’s technology isn’t explicitly geared towards AI applications, but chip producers such as Nvidia are selecting it for their central processing units (CPUs) to complement their AI chips. Some question whether Arm really is an AI stock, but any kind of AI connection is currently enough for markets.
Cautious investors might think twice. Arm trades on 90 times estimated earnings. Arm’s small float – just 10 per cent of shares are traded, with the rest controlled by Japan’s Softbank Group – means volatility appears inevitable.
Additionally, the stock’s post-IPO (initial public offering) lock-up period, which restricts insiders from dumping shares, expires next month. Caveat emptor.
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