While the market is repricing ARM as the ultimate toll booth of the AI smartphone & edge computing revolution, ARM's stock valuation has entered a financial stratosphere that stretches standard P/E model to its breaking point.
ARM's Bull Case: Whenever Apple, NVIDIA or Microsoft design an AI chip, they must pay ARM an upfront licensing fee plus a recurring royalty on every chip shipped.
ARM's royalty rate makes it an incredibly high margin scalable empire.
The Bear Case: ARM P/E ratio is pushing past 95x. This means Wall Street has already priced in a near flawless hypergrowth trajectory for the next 5 years.
ARM is a great stock to hold long term as it has exponential growth ahead.
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