TLDR
- Arm Holdings shares surged 11.07% to $171.94 on Monday after OpenAI partnership news
- OpenAI is working with Arm to create custom data center CPUs alongside a Broadcom manufacturing deal
- Options traders demonstrated bullish confidence with double the normal call volume
- Wall Street analysts maintain Strong Buy ratings with an average target of $172.28
- Q2 FY2026 earnings report scheduled for November 5, 2025
Arm Holdings closed Monday’s session at $171.94, marking an 11.07% gain after news broke of a partnership with OpenAI. The chip designer will develop custom server processors for the AI company’s data center operations.
Reports from The Information revealed that OpenAI selected Arm to build CPUs for general computing tasks. This partnership runs parallel to a separate agreement with Broadcom for AI-specific chip manufacturing.
The stock traded between $157.00 and $175.00 during Monday’s session. Pre-market activity Tuesday showed an additional 2.65% gain as momentum continued.
SoftBank Group, which holds majority ownership of Arm, has been securing financing backed by Arm shares. These funds are earmarked for additional OpenAI investments, creating an interesting web of connected interests.
Strong Options Activity Shows Trader Confidence
Monday’s trading saw 55,814 call contracts change hands on Arm stock. That represented twice the typical daily volume for call options.
The put-call ratio dropped to 0.14, revealing heavy buying pressure on the call side. This metric suggests traders expect continued price appreciation.
Volume across all Arm trading spiked to 10-11 million shares. That’s well above average and indicates broad institutional and retail interest in the stock.
The company trades at approximately 260 times trailing earnings. That premium valuation reflects expectations for growth in AI chip markets.
Recent Wins and Upcoming Milestones
Arm has secured several high-profile design wins recently. Qualcomm announced plans in September to use Arm’s v9 architecture in next-generation smartphone chips.
The company reported Q1 FY2026 revenue of $1.05 billion with earnings of $0.35 per share. Royalty revenue jumped 25% to $585 million as licensees shipped more Arm-based chips.
The stock has rallied 23% over the past two weeks. It’s now trading near its 52-week high of $182.88.
Arm’s 50-day moving average sits at $144, while the 200-day is around $136. The current price represents a premium to both technical indicators.
Analyst Outlook Remains Positive
Wall Street coverage includes 18 Buy ratings and three Hold ratings issued in the past three months. That creates a Strong Buy consensus from the analyst community.
The average price target of $172.28 aligns closely with current levels. Individual targets range from $100 to $225 depending on growth assumptions.
Morgan Stanley maintains a $171 target while Evercore ISI holds at $178. These projections suggest limited near-term upside based on current valuations.
The company will report Q2 fiscal 2026 results on November 5. Investors will focus on guidance updates and commentary about AI data center opportunities.
The OpenAI partnership adds to Arm’s growing presence in AI infrastructure. Major cloud providers are increasingly deploying Arm-based server designs for efficiency and performance benefits.
