Arm's stock surges 14% after HSBC analyst doubles price target to $205

Arm's stock price jumped by over 14% after a major upgrade from HSBC analyst Frank Lee. He now rates the company as a 'buy' and has doubled his price target to $205. Lee argues that Wall Street is underestimating how AI will boost Arm's business in the years ahead.

Arm has rapidly expanded its server CPU licensing since 2021. Major cloud providers—including AWS, Microsoft, and Google—have developed custom Arm-based processors like Graviton, Cobalt, and Axion. While Intel and AMD still dominate traditional data centres, enterprises are shifting to Arm for better cost efficiency and lower power use.

The company's server CPU royalty revenue is forecast to grow by 76% annually over the next five years. By fiscal 2031, this segment could generate $4 billion. The surge in AI workloads is driving demand for high-performance processors, positioning Arm to benefit from this trend. Lee's upgraded outlook reflects confidence in Arm's long-term growth. His revised price target suggests the stock could climb further as AI adoption accelerates across industries.

Arm's recent stock rise follows a strong vote of confidence from HSBC. The company's expanding role in AI-powered servers and cloud computing could push its share price higher in the coming years. Analysts now see significant upside as demand for energy-efficient processors grows.