10 Most Promising New Technology Stocks According to Hedge Funds

3. Arm Holdings plc (NASDAQ:ARM)

Number of Hedge Funds: 38

Arm Holdings (NASDAQ:ARM) is a British company that specializes in designing and licensing technology for computer chips. The company operates a worldwide platform that focuses on creating energy-efficient processors used in various devices, from smartphones to supercomputers. Instead of manufacturing chips themselves, they design the architecture for chips (like CPUs and GPUs) and license these designs to other companies. This means they provide the blueprints that other manufacturers use to create their custom chips tailored for specific applications. As a result, around 99% of the world’s smartphones and more than 300 billion chips use the company’s energy-efficient CPUs.

One of the major competitive edges for the company is its unique business model which places Arm Holdings (NASDAQ:ARM) at the center of the AI revolution. The company earns money on licenses and then makes most of its revenue from royalties once the products with those chips start selling. For instance, the company’s architecture is in the Grace Blackwell Superchip, made by Wall Street’s favorite chip maker.

During the second quarter of fiscal 2025, the company generated $844 million in revenue up 5% year-over-year. This was on the back of record levels of royalty revenue and continued strength in license revenue. Royalties for the quarter rose 23% year-over-year to $514 million driven by the increased adoption of Armv9 and smartphone market recovery.

As another major milestone, the company also announced its strategic partnership with Meta to work on optimizing Llama, Pytorch, and ExecuTouch for Gen AI. Considering the irreplaceable use case of its products and its unique business model, Arm Holdings (NASDAQ:ARM) is one of the most promising new technology stocks according to hedge funds. The stock was held by 38 hedge funds in Q3 2024, as per Insider Monkey’s database.