How ARM Holdings plc (ADR) (ARMH) Measures Up as a GARP Investment

And rising technology demand is set to keep turnover rolling higher. ARM Holdings estimates that the number of Internet-connected devices will triple to 30 billion by 2020, pushed by a one-third increase in the number of middle-class consumers to 3.3 billion over the period.

However, the company is likely to experience increasing competition in the chip market in coming years, with Intel Corporation (NASDAQ:INTC) in particular inking deals with tech giants such as Motorola and Lenovo to use its platform. Indeed, Liberum Capital notes that phone and tablet leviathan Samsung‘s upcoming Galaxy Tab 3 10.1 is tipped to be using an Intel processor and would represent the first Android product from Samsung incorporating an Intel processor, rather than an ARM equivalent.

So even though ARM Holdings plc (ADR) (NASDAQ:ARMH) looks set to remain a forerunner in the semiconductor market for some time to come, I would argue that potential medium-term earnings growth already appears locked into the price. And in the long term, the onset of heavy competition could put revenue under pressure further down the line.

The article How ARM Holdings Measures Up as a GARP Investment originally appeared on Fool.com and is written by Royston Wild.

Fool contributor Royston Wild has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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