ARM Stock Forecast Jumps 46% as Citi Analyst Notes that Arm’s Newest Tech Commands “2x the Royalty Rate”

Arm Holdings ARM +1.14% ▲ is currently in a strong position as the demand for artificial intelligence chips reaches new heights. In a report released on March 19, 2026, 5-star Citi analyst Andrew Gardiner reiterated his Buy rating forecast for the company, maintaining a price target of $190. This suggests a massive 46.36% upside from the stock’s recent price of $129.82. Gardiner’s confidence comes as the company successfully moves its customers toward newer technology that earns much higher fees.

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ARM’s New Architecture Drives Record Royalty Revenue

The main reason for the positive outlook is the fast adoption of Arm’s newest technology, known as the v9 architecture. Andrew Gardiner noted that this new version generates roughly “2x the royalty rate” of the older version. In his latest update, he explained that as more companies switch to v9 for their AI chips, Arm’s income from every chip sold is growing significantly. He highlighted that this shift is a primary driver for the company’s 27% jump in royalty revenue this year, which recently hit a record $737 million.

Arm’s AI Data Center Growth Outpaces Mobile Markets

While Arm is famous for being in almost every smartphone, its biggest growth is now coming from the systems that power AI in the cloud. Gardiner pointed out that “data center royalty revenue has grown more than 100% year-on-year.” Major tech giants like Amazon AMZN -0.53% ▼ , Google GOOGL -0.18% ▼ , and Microsoft MSFT -0.71% ▼ are all building their own custom AI chips using Arm’s designs. Gardiner believes that in a few years, the data center business will become Arm’s largest segment, eventually becoming even bigger than its mobile phone business.

Arm’s Strong Licensing Shows Future Momentum

Before a chip is ever sold, companies must pay Arm a licensing fee just to use the designs. This part of the business is also booming, with licensing revenue reaching $505 million last quarter. Gardiner explained that this 25% increase shows that the world’s leading tech companies are heavily investing in Arm’s technology. Because these licenses are signed years before a chip hits the market, this growth acts as a sneak peek into the high sales expected for the rest of 2026 and 2027.

Is Arm Stock a Strong Buy?

Yes, Arm Holdings stock is indeed a Strong Buy, according to TipRanks. This is based on 18 Buy and three Hold recommendations. The average 12-month ARM stock price target of $162.12 indicates 24.88% upside potential.

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