Arm Holdings plc American Depositary Shares (ARM) Fair Value & PE Analysis
Semiconductors · NASDAQ
Current Price
$243.32
PE Ratio (TTM)
250.8x
Intrinsic Value
Outside reliable range
What Is Arm Holdings plc American Depositary Shares's Fair Value?
The PE model output for Arm Holdings plc American Depositary Shares (ARM) falls outside its reliable range, often because earnings are unusually low, negative, or volatile. Treat any single fair value number with extra caution here.
How the PE model works · Recalculate in PE mode · ARM intrinsic value (DCF view)
Is Arm Holdings plc American Depositary Shares (ARM) Overvalued?
Because the model output for ARM is outside the reliable range, no overvalued or undervalued read is given here. Use the PE calculator below to test your own assumptions instead.
COMPETITIVE MOAT
↑Dominant Instruction Set Architecture
ARM's architecture is the de facto standard for mobile and embedded devices. This widespread adoption creates significant inertia and makes it difficult for competitors to displace.
↑Extensive Ecosystem and Partner Network
A vast network of chip designers, manufacturers, and software developers relies on ARM's IP. This deep integration fosters strong switching costs for ecosystem participants.
↑Licensing Model Creates Scalability
ARM's IP licensing model allows for rapid global expansion without direct manufacturing. This asset-light approach enables broad market penetration and revenue diversification.
INVESTMENT RISKS
↓Dependence on Mobile Market Cycles
A significant portion of ARM's revenue is tied to the cyclical nature of the smartphone market. Downturns in smartphone sales can directly impact ARM's financial performance.
↓Intensifying Competition in AI
The rapid evolution of AI hardware presents a significant competitive threat. ARM must continuously innovate to maintain its relevance against specialized AI chip designers.
↓Valuation Sensitivity to AI Optimism
ARM's stock price has experienced significant volatility driven by AI enthusiasm. Any perceived slowdown in AI adoption or increased competition could lead to sharp corrections.
Base case
ARM base case PE valuation
Base case assumptions: 20.0% annual earnings growth, 50x target PE, 10% discount rate, 5 year projection. Data as of 2026-08-21.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the ARM PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Arm Holdings plc American Depositary Shares respond.
Open PE Calculator for ARMCompany Overview
Arm Holdings plc is a leading technology firm that conceptualizes, engineers, and licenses core processing unit (CPU) designs and complementary technologies. These foundational innovations are crucial for semiconductor manufacturers and original equipment manufacturers (OEMs) to develop their own products. The company's diverse portfolio encompasses microprocessors, comprehensive system intellectual property (IP) solutions, graphics processing units (GPUs), physical IP alongside its associated system IPs, various software offerings, development tools, and an array of supplementary services. Its technology underpins a wide spectrum of industries, including the automotive sector, advanced computing infrastructure, consumer electronics, and the burgeoning Internet of Things (IoT) landscape. Established in 1990, Arm Holdings plc maintains its corporate headquarters in Cambridge, United Kingdom. With a significant global footprint, Arm conducts operations across the United States, the People's Republic of China, Taiwan, South Korea, and numerous other international regions. Currently, Arm Holdings plc functions as a subsidiary entity of Kronos II LLC.
Financial Metrics — ARM PE Stock Valuation Data
PE Ratio (TTM)
250.8x
PEG Ratio
5.34
Earnings Yield
0.40%
ROE (TTM)
13.0%
Revenue/Share (TTM)
$4.84
Debt/Equity
0.06x
Frequently Asked Questions
What is the PE ratio of ARM?
The trailing twelve-month PE ratio of ARM reflects how much investors pay per dollar of Arm Holdings plc American Depositary Shares's earnings. This metric is most useful when compared to Semiconductors peers and the company's own historical range.
Is ARM overvalued based on PE ratio?
ARM's PE of 250.8x combined with a PEG ratio of 5.34 provides a growth-adjusted perspective. A PEG above 2.0 means the P/E is high relative to the earnings growth rate. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Semiconductors, a DCF analysis may be more appropriate.
How do I value ARM stock using PE ratio?
To value Arm Holdings plc American Depositary Shares using PE: (1) Compare the current PE (250.8x) against the Semiconductors median to assess relative pricing, (2) check the PEG ratio (5.34) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of ARM?
ARM's PEG ratio is 5.34, calculated by dividing the PE ratio (250.8x) by the expected earnings growth rate. A PEG above 2.0 means the P/E is high relative to the expected earnings growth rate. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for ARM stock valuation?
PE ratio gives a quick relative read — how ARM is priced versus Semiconductors peers. DCF provides an absolute value based on projected free cash flows. For the most reliable valuation, use PE as a quick comparability screen and DCF for a deeper fundamental analysis. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See ARM DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Technology valuationsP/E and DCF value ARM with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-08-21. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.