ARM Holdings
ARM Holdings is a leading semiconductor and software design company known for its chip architecture used in a vast array of devices, including smartphones, IoT devices, and automotive applications. Apple’s customers range from Apple, Nvidia, Google, Amazon, Samsung, AMD, and many more reputable names. This makes the company indispensable in the industry because even its competition relies on its technology in one way or another. Arm was founded in 1990, but IPO’d on the public market this month at a valuation of 70B, 25% higher than projected, which makes it the most valuable IPO of the year. The company’s show revenue at 2.67B in 2020, 3.68B in 2021, 3.23B in 2022, and $2.68B so far in 2023. The 70B valuation is a high number when we compare revenue and revenue growth to valuation growth. Arm’s valuation is also high when compared to competitors like On Semi, that’s trading at a lower valuation, yet has much higher revenue and YoY growth. This doesn’t mean Arm is a bad investment, but it is something to note when putting a price to it. Early stage IPOs have a long history of being overvalued, and it takes time for markets to adjust their price to a comfortable number. The semiconductor sector is generally overvalued right now with the help of Nvidia’ 2023 rally so it is not a surprise that investors drove Arm up on its initial trading day.