10 Worst Artificial Intelligence (AI) Stocks To Buy According to Financial Media

8. Arm Holdings (NASDAQ:ARM)

Number of Hedge Fund Holders: 38

Arm Holdings (NASDAQ:ARM) is a semiconductor and software design company that licenses its technology to other companies for use in their products. It specializes in designing energy-efficient processors and other components that are used in a range of devices, including smartphones, tablets, and IoT devices, using AI to enable features like machine learning, natural language processing, and computer vision.

The company has recently been gaining market share in automotive and cloud services, although there are challenges in IoT and networking equipment due to inventory adjustments in the industrial sector.

FQ1 2025 revenue grew 39% year-over-year to $939 million, the highest quarterly revenue to date. Licensing revenue was up 72%, and royalty revenue rose 17% year-over-year. Armv9’s adoption and a recovering smartphone market drove royalty revenue growth. Smartphone royalty revenue increased over 50% compared to the prior year, even though unit sales only grew slightly.

The iPhone 16, featuring Arm Holdings’ (NASDAQ:ARM) A18 chip, highlights its leadership in mobile and AI technology. This partnership surrounding the iPhone 16 has driven a 60% increase in its stock price in 2024.

The company has also been added to the PHLX Semiconductor Sector Index (SOX) this week. This reflects its rapid growth and diversification as a foundational compute platform across various technologies.

Arm Holdings’ (NASDAQ:ARM) launches of the Axion processor and Ethos-U85 for edge AI demonstrate its leadership in the growing AI market. Windows on Arm PCs and ongoing demand for compute subsystems across mobile, cloud, and automotive sectors further strengthen its position as a leader in the tech ecosystem. With a network of ~20 million software developers, the company is well-positioned for growth.