Artificial intelligence (AI) has ushered in a new computing standard and ARM’s technology is becoming a design of choice. Investors were blindsided by how well this company has been doing in the AI arms race and sent shares more than 50% higher the day after its recent earnings report. Sales are booming as customers are scrambling to implement AI in their latest devices. The results underscore ARM’s crucial role in both consumer electronics and data center systems.
ARM proved to investors it’s capitalizing on the integration of AI into everyday life. Renowned for excelling in low-power, high-efficiency computing, ARM’s chips are integral for devices that operate without continuous access to power sources. Its why ARM boasts customers such as Samsung and Apple, as their chips prolong battery life between charges. And leading virtual assistants, like Apple’s Siri and Amazon’s Alexa, have been optimized to run on this technology. ARM’s new Version 9, which comes with a higher price tag, potentially makes these assistants more powerful and can help us interact with AI in ways we couldn’t previously expect.
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Crucially, ARM is playing a pivotal role in the expansion of AI data centers. The company is seeing rapid growth for its data center products as it displaces legacy CPUs from Intel and AMD, known as x86 architecture. Through a collaboration with Nvidia, ARM-designed CPUs now seamlessly integrate with Nvidia GPUs. The outcome is an immense 15x increase in processing speeds. And with less than a 1% share of the data center CPU market, it’s easy to understand why investors are so bullish about this company’s growth prospects. ARM is a leading contributor to the data center revolution.
Source: Nvidia
Source: Goldman Sachs
In my opinion, ARM’s highly efficient chips are proving fundamental to the growth of AI. While Nvidia chips excel in training AI to be more intelligent, ARM’s chips bridge the gap between the powerful technology and our everyday lives. Some of the world’s most recognizable brands, from Apple to Samsung, build on top of this technology and are eager to bring AI to all of us. Whether in smartphones, consumer electronics, or high-performance computing, there is a global rush to integrate AI into the latest devices, and ARM stands ready to support them all.
Blake Anderson, Sr. Analyst, Investment CFA®
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