Jefferies’ Top Crowded Semiconductor Long Positions: Top 10 Stocks

4. ARM Holdings plc (NASDAQ:ARM)

Number of Hedge Fund Holders In Q2 2024: 38

Shares Short % Of Outstanding: 1.39%

ARM Holdings plc (NASDAQ:ARM) is a British chip design and intellectual property company that is one of the most consequential in the semiconductor industry right now. Its IP and designs are used in the majority of smartphone processors worldwide. Additionally, advances in chip manufacturing which have enabled TSMC to make chips with features as small as 3 nanometers have opened a new market for ARM Holdings plc (NASDAQ:ARM). This is the data center industry, with big ticket names like Amazon and Meta relying on the firm’s designs to build and use custom data center processors. ARM Holdings plc’s (NASDAQ:ARM) status in the chip industry is clear by the fact that NVIDIA–the world’s eminent AI GPU company–was fully intent on acquiring the company before prevented by regulators. Consequently, it enjoys a wide moat but can see trouble in the future from open-source design rules such as RISC V.

Bireme Capital mentioned ARM Holdings plc (NASDAQ:ARM) in its Q4 2023 investor letter. Here is what the fund said:

“In our view this was a transparent attempt to boost revenue growth ahead of the IPO. This might work as a one-time boost to sales, but it is not sustainable and will anger and alienate customers. ARM’s largest customers increasingly choose to license just the ARM instruction set architecture (ISA) rather than purchase ARM’s off-the-shelf chip designs. They prefer to design their own chips so they can better optimize their hardware with their software, as Apple has done to great effect with its custom silicon. It is hard to imagine ARM getting significantly more revenue share while their value-add diminishes.”