Bill Baruch, Founder, Blue Line Capital Arm Holdings ARM-Q WAIT Feb 16, 2024

Shares slumped badly in recent weeks, but rebounded 7% today because is using their processors' design in the new iPhone unveiled today. But this was not news. Is up 146% since debuting last year. Huge upside. Buy dips.

It's one year after it went public. ARM has rallied 10% in the last week, even slumping 6% today after reports of Apple iPhone's weak orders, which contains ARM's chips. He doesn't mind that, because ARM is up 175% since its IPO.

The major issue is that it has a very small public float. The valuation is very high and there is a demand/supply issue. He is considering selling it but likes the space.

Designs chips, makes blueprints, and licenses technologies. Other companies actually produce. Lots of devices, especially mobile, use their tech. Trades at 90x forward PE, 24-25% growth rate. Trades at 37x price to sales. Bit rich for him.

May be a bit of a gift. Likes it down here between $140-145, where it has a bit of support. AAPL comes out next week on October 31, and ARM is a big supplier to them. ARM may pop then. 

He expects a good report on Wednesday, but it may not matter if the overall market is down. He needs to hear about their lawsuit with Qualcomm.

VRT hasn't been around that long, track record not as extensive as others in the AI infrastructure space.

He'd lean toward ARM. Likes the company, following it. Well positioned to extract value out of the AI wave. Now looking for value within the AI space for companies not as expensive as NVDA.

Softbank owns 90% of this, which is challenging. Valuation is too high, and they aren't in the AI business. But if they move into AI, it will be a game-changer. However, ARM offers best-in-breed mobile CPUs.

A great performer but was sideways most of last year. This month already, though, it has jumped nearly 20%. Not merely a cell phone provider, but pervasive in many areas.

12-month price target of $193. February earnings report beat on top and bottom lines, guided higher. PE of almost 100x, expensive, but good runway ahead. No dividend.