UK chip designer Arm experiences nearly a twofold increase in shares driven by AI advancements

Arm Holdings, a UK chip designer, has experienced a significant increase in its stock market value in less than a week. This surge in value is attributed to investors betting on the growth of the artificial intelligence (AI) industry. Recently, Arm reported positive financial results that highlighted the rising demand for AI-related technology, resulting in increased sales. Arm's chips are already used in nearly every smartphone worldwide. In 2016, Arm was acquired by SoftBank, a Japanese company, and it returned to the stock market in September 2021. Following its earnings announcement last week, Arm's shares have skyrocketed, experiencing a growth of over 98%. This comes in parallel with chipmaker Nvidia, whose shares have more than tripled in value over the past year due to high demand for AI chips. The AI boom has propelled Nvidia to become one of the world's most valuable publicly-traded companies, with a market valuation of about $1.8 trillion (£1.4 trillion). It has also joined the esteemed "Trillion-dollar club," alongside tech giants such as Apple, Microsoft, Alphabet, and Amazon. Although Arm's technology is not directly involved in AI work, chip manufacturers such as Nvidia opt for Arm's central processing units (CPUs) to accompany their AI-specific chips. Arm's client base also includes prominent consumer brands like Apple. The automotive industry is seeing a rise in demand for Arm-designed chips due to the development of self-driving technology. Arm was established in 1990 by a group of chip designers in Cambridge. It was later acquired by SoftBank for $32 billion in 2016. However, SoftBank's plan to sell Arm to Nvidia was abandoned in April 2022 due to regulatory challenges. Instead, SoftBank has decided to sell shares of Arm on the Nasdaq stock exchange in New York. The surge in Arm's shares is good news for SoftBank, which has suffered losses from the declining valuations of various investments, including troubled office space company WeWork. SoftBank still retains approximately 90% ownership of Arm and has seen its own shares gain nearly 30% in the past week.