12 Best New Stocks to Buy According to Hedge Funds

7) Arm Holdings plc (NASDAQ:ARM)

Number of Hedge Fund Holders: 38

Arm Holdings plc (NASDAQ:ARM) is a British semiconductor and software design company. It was listed on NASDAQ on 14^th September 2023.

Wall Street believes that Arm Holdings plc (NASDAQ:ARM)’s latest v9 chip architecture continues to gain traction. This transition is significant because v9-based chips command increased royalty rates, potentially doubling or even quadrupling the fees the company receives per chip.

The transition should act as a revenue driver as it affects Arm Holdings plc (NASDAQ:ARM)’s core mobile market, where it has a strong market position. As and when smartphone manufacturers upgrade their devices to incorporate v9-based processors, Arm Holdings plc (NASDAQ:ARM) will benefit from increased royalty rates on a massive installed base. Furthermore, the enhanced capabilities of v9 architecture, which includes improved AI performance and security features, can ramp up adoption in other markets like automotive and IoT, further driving royalty growth.

The compounding effect of increased royalty rates and expanding market applications should support topline and bottom-line growth. Arm Holdings plc (NASDAQ:ARM)’s energy-efficient chip designs are well-suited for an increased demand for on-device AI processing in smartphones, PCs, and other edge devices. The on-device AI market size was valued at US$17 billion in 2023 and should reach US$114.36 billion by 2031, as per Verified Market Research. Arm Holdings plc (NASDAQ:ARM) is well-positioned to capture a substantial portion of this expanding market.