Buy the pullback in this chip stock: Mizuho

Investing.com -- Mizuho said in a note Tuesday that investors should take advantage of the recent slide in one chip stock, arguing that the market has become overly pessimistic about handset demand.

Arm Holdings (NYSE: ARM) is the company in question. The stock has fallen about 30% since November, even as the Philadelphia Semiconductor Index has gained 10%. But according to Mizuho analyst Vijay Rakesh, the concerns driving that decline are “overdone.”

Mizuho would “be buyers of ARM on the ~30% pullback,” citing multiple growth catalysts that extend well beyond smartphones.

The firm argues that Arm’s royalty revenue, which is roughly 50% mobile, has “always outgrown handset” trends and is set to rise 7% to 31% annually from 2021 to 2027.

Mizuho highlighted the shift toward Arm’s v9 architecture, which carries “2x ASP/core at v9 vs. v8,” as a major tailwind.

Rakesh also pointed to growing interest in in-house chips, saying potential custom ASIC and CPU ramps in 2027 and 2028 could add “$1B+ top-line upside.”

These opportunities are said to include a possible AI training and inference ASIC for OpenAI and SoftBank, a project that the firm said “could conservatively drive ~$1B…into C27-28E.”

Beyond mobile, hyperscalers are increasingly adopting Arm designs for servers. Mizuho cited AWS Graviton, Microsoft Cobalt, Meta’s planned CPU and Nvidia’s Grace and Vera platforms as drivers of “growing CSS customer base” and stronger royalty mix.

Reiterating its Outperform rating and $190 price target, Mizuho said Arm remains “well positioned as the broadest global semiconductor platform.”

You May Also Be Interested In

• Chevron signed an agreement with Iraq's Basra Oil Company to advance commercial negotiations for West Qurna 2
• DWS Municipal Income Trust sets November 2026 liquidation timeline
• Boxabl completes SPAC merger, begins trading on Nasdaq at $3.5B value