ARM
Arm Holdings plc
Technology · Semiconductors · United Kingdom · Stock
Score Breakdown
Scored for Aggressive Growth profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- The growth and profitability factors contributed positively, reflecting strong revenue expansion and healthy margins, but these were offset by low scores in financial health and momentum.
- A zero score on dividends, by design for a confirmed non-payer, removed a meaningful potential source of composite score points.
- The theme factor also scored zero despite two high-profile macro theme assignments, limiting the total composite score to 42.3 out of 100 and resulting in a Monitor Only label.
Why Not Higher
- Earnings and EPS growth lagged revenue growth, the dividend score is zero by design, and both the momentum and theme factors contributed nothing to the composite score.
- The financial health factor scored only 8 out of 20, and the momentum factor scored only 7 out of 20, collectively dragging the total score well below levels associated with stronger ratings.
Data Confidence
6 / 10
Medium — some data gaps
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew from $4,007,000,000 in FY2025 to $4,920,000,000 in FY2026, a gain of 22.8%. Net income rose 14.1% over the same period, from $792,000,000 to $904,000,000, while diluted EPS increased 13.3% from $0.75 in FY2025 to $0.85 in FY2026.
The model rewarded the strong double-digit top-line expansion, though the more modest earnings and EPS growth rates relative to revenue growth tempered the score slightly below the maximum.
In FY2026, ARM posted a net margin of 18.4%, an operating margin of 18.3%, and a return on assets of 8.4%.
The model recognized healthy and closely aligned net and operating margins alongside a solid asset return, reflecting efficient conversion of revenue to profit, with the score stopping short of the maximum likely due to the moderate return on assets.
Filing evidence currently available does not support a more specific explanation for this factor.
Filing evidence currently available does not support a more specific explanation for this factor.
ARM does not currently pay a dividend; this is a genuine characteristic of the company, not a data limitation.
Because the model rewards dividend income and yield history, a confirmed non-payer receives a score of zero on this factor by design.
ARM is assigned to the macro themes of AI Infrastructure and Semiconductors.
Although ARM carries two high-profile macro theme assignments, this assignment did not translate into a positive score under the model's current methodology for this factor.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
Arm Holdings delivered strong top-line growth of 22.8% in FY2026, with revenue rising to $4.92 billion, though net income and EPS growth lagged at 14.1% and 13.3% respectively, suggesting some margin pressure on the path from revenue to earnings. Profitability metrics are healthy, with an 18.4% net margin and 18.3% operating margin, reflecting efficient operations, while return on assets of 8.4% is solid but moderate. The company carries a High risk rating and a Monitor Only label, weighed down by weak momentum and financial health scores, the absence of any dividend, and a theme score of zero despite being assigned to the high-profile AI Infrastructure and Semiconductors themes. Overall, the composite score of 42.3 out of 100 reflects a business with genuine operational strengths but meaningful model-level concerns that limit its current ranking.
Plain English
Arm is growing its sales fast and turning a decent profit, but its stock momentum is weak, it pays no dividend, and several risk factors keep it in a 'watch but don't act' category for now.
Bull Case vs. Bear Case
Bull Case
- Revenue surged 22.8% year-over-year to $4.92 billion in FY2026, demonstrating strong and sustained demand for ARM's products.
- Net and operating margins are closely aligned at 18.4% and 18.3% respectively, indicating disciplined cost management and efficient conversion of revenue to profit.
- ARM is assigned to two high-profile macro themes — AI Infrastructure and Semiconductors — reflecting its strategic positioning in some of the most important technology growth areas.
Bear Case
- Net income growth of 14.1% and EPS growth of 13.3% both trailed revenue growth of 22.8%, suggesting that costs are rising faster than revenues and compressing the earnings benefit of top-line expansion.
- ARM pays no dividend and has no dividend history, meaning income-focused investors receive no return while waiting for the investment thesis to play out.
- Despite being assigned to AI Infrastructure and Semiconductors themes, the theme factor contributed zero points to the model score, indicating the thematic tailwind has not yet translated into a measurable scoring advantage.
What Could Change the Picture
Bullish Triggers
- If earnings and EPS growth rates begin to converge with or exceed revenue growth, it would signal improving operating leverage and could meaningfully lift the profitability and growth scores.
- A sustained improvement in momentum metrics could indicate that the market is beginning to price in ARM's AI Infrastructure and Semiconductors positioning more fully.
Bearish Triggers
- If the gap between revenue growth and net income growth widens further, it would suggest deteriorating cost discipline and could pressure the profitability score downward.
- Continued absence of dividend payments combined with weak momentum could make the stock less attractive relative to peers that offer income or stronger price performance.
Risk Profile
High RiskThe financial health factor scored 8 out of 20 and the momentum factor scored 7 out of 20, both below the midpoint of their respective ranges, which together contribute to the High risk rating assigned to ARM. These weak sub-scores indicate that despite solid profitability, there are underlying concerns about the company's balance sheet resilience and recent performance trajectory.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.