It was only six months ago that investors were talking about the reintroduction of Arm Holdings (NASDAQ: ARM) to the public markets. Now, just months later, market watchers are debating whether it's too late to buy the stock. Indeed, Arm Holdings has delivered 176% returns (as of market close on Thursday) since its late September initial public offering (IPO), more than 13 times the returns of the S&P 500.

Make no mistake -- it's the accelerating adoption of artificial intelligence (AI) that has sparked those gains. Arm's central processing units (CPUs) are found in a wide variety of electronic devices, including personal computers, tablets, smartphones, thermostats, drones, and smart TVs. However, its CPUs are also the gold standard, helping to run hyperscale computers, data centers, and cloud infrastructure services. It's this last group that represents the most compelling opportunity.

What does all this mean for investors who sat out Arm's recent run? Should they buy the stock now in the hope of additional upside or simply look elsewhere due to the company's frothy valuation? Let's dig in to see what the evidence reveals.

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Source Fool.com