Their stock is severely overvalued. Calculating the fair value of the company stock using the Fair Value equation (Fair Value = EPS * EPS Growth Rate) shows that the value should be at ~$2; when I first did the calculations, I got $0.1. Other investor outlets set it at ~$50-$60 as a fair price, but it is still overvalued at over twice the fair price.
This is a bubble but will it explode or will Arm Holdings push through and live up to it? Arm has big customers, including Apple, Nvidia, Google, Microsoft, Amazon, Samsung, Intel, and TSMC. So some big names are affiliated with them. Arm also reports that 100 billion Arm devices for AI will be ready by the end of 2025, significantly increasing their sales revenue excluding the production of their regular chips.
I am super skeptical about this stock, it truly can go both ways. Just by sheer instinct, I'll think the stock will plummet but all the experts say “buy”. I am not an expert, so I will invest a smaller sum of my savings in case I am wrong and they are right.
What is your outlook on this?
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