Arm Holdings plc American Depositary Shares (ARM) Fair Value & PE Analysis
Semiconductors · NASDAQ
Current Price
$380.81
PE Ratio (TTM)
447.8x
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 the range we consider reliable, often because earnings are unusually low, negative, or volatile. Treat any single fair value number with extra caution here.
How our 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 our reliability range, we do not give an overvalued or undervalued read here. Use the PE calculator below to test your own assumptions instead.
COMPETITIVE MOAT
↑Dominant IP Licensing Model
Arm's architecture is licensed by nearly every major semiconductor company. This widespread adoption creates a powerful network effect, making it difficult for competitors to displace their foundational technology.
↑Deep Ecosystem Integration
Arm's designs are deeply embedded in the software and hardware ecosystems of numerous industries, particularly mobile and increasingly AI. This integration fosters customer loyalty and high switching costs.
↑AI Chip Design Leadership
Arm's focus on energy-efficient AI processing is gaining significant traction. Their ability to innovate and meet the growing demand for specialized AI chips strengthens their market position.
INVESTMENT RISKS
↓Executive Stock Sales
Recent insider selling, even before significant rallies, can signal a lack of confidence in future stock performance or a desire to capitalize on current highs, potentially impacting investor sentiment.
↓AI Trade Volatility
The faltering AI trade suggests that the rapid growth and high valuations in this sector may be unsustainable. A broader market downturn or a shift away from AI could negatively impact Arm's revenue.
↓High Valuation Concerns
A 67x forward sales multiple indicates a very high valuation. Any slowdown in growth or increased competition could lead to a significant stock price correction, even with strong underlying performance.
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 2026-06-12.
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)
447.8x
PEG Ratio
37.32
Earnings Yield
0.22%
ROE (TTM)
11.9%
Revenue/Share (TTM)
$4.63
Debt/Equity
0.05x
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 447.8x combined with a PEG ratio of 37.32 provides a growth-adjusted perspective. A PEG above 2.0 suggests ARM may be richly valued even accounting for growth. 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 (447.8x) against the Semiconductors median to assess relative pricing, (2) check the PEG ratio (37.32) 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 37.32, calculated by dividing the PE ratio (447.8x) by the expected earnings growth rate. A PEG above 2.0 often signals the stock is priced aggressively relative to its growth trajectory. 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 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.