This $50 Billion Artificial Intelligence (AI) IPO Is Generating Massive Interest. There's Also a Huge Red Flag

After back-to-back record-setting performances in 2020 and 2021, the market for initial public offerings (IPOs) hit a slump. The general market downturn last year caused many companies to delay their market debuts, but there's evidence of a rebound in the IPO market.

Exhibit A is the excitement surrounding the upcoming public debut of Arm Holdings. Nvidia (NASDAQ: NVDA) offered to buy the designer of central processing units (CPUs) used in smartphones for $40 billion in 2020, but regulatory challenges ultimately quashed the deal. Now, Arm is hoping to parley its expertise in semiconductors and the accelerating adoption of artificial intelligence (AI) into a $50 billion valuation, which would mark a big win for owner Softbank Group (OTC: SFTB.Y).

While there's been massive interest in the debut among tech circles, there's also a glaring red flag investors shouldn't ignore.

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Source Fool.com