1 Wall Street Analyst Thinks Arm Holdings Stock Is Going to $135. Is It a Buy?

While chips based on Arm Holdings' (NASDAQ: ARM) technology dominate multiple markets, including smartphones, it's the company's opportunity to expand its presence in the data center and PC market that has analysts at KeyBanc excited.

KeyBanc reiterated its "overweight" rating on Arm to kick off the week while boosting its price target from $120 to $135. From its current price, the new target suggests a 6.5% upside over the next 12 months or so. Shares of Arm have surged this year, and KeyBanc sees the rally continuing.

In the data center, x86 chips from Intel and Advanced Micro Devices dominate the landscape. The situation is starting to change, though, with artificial intelligence (AI) being a key driver. GPU giant Nvidia is pushing its so-called "superchips," which combine its powerful GPU cores and Arm CPU cores tuned for data center workloads. KeyBanc expects Nvidia's GB200 chip, announced in March, to boost Arm's presence in the data center market.

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Source Fool.com