Arm Stock Just Entered Overbought Territory. Is It Too Late to Chase the Rally Here?

Arm Holdings (ARM) shares are ripping higher this morning after the chip design firm announced its first-ever in-house artificial intelligence (AI) chip, the “AGI” central processing unit (CPU). 

This monumental rally pushed ARM’s relative strength index (14-day) into the late 70s, suggesting the SoftBank (SFTBY)-owned company is now “overbought” and may be due for a breather.  

Following today’s surge, Arm stock is up roughly 55% versus its YTD low but a senior Raymond James analyst believes it could push further up through the remainder of 2026. 

Is It Too Late to Invest in ARM Stock?

Arm shares charged higher on Wednesday mostly because AGI marks the company’s most notable strategic pivot in its 35-year history.

Traditionally a licensor of intellectual property, the Nasdaq-listed firm is now entering the merchant silicon market, with plans of selling its own chips directly to data center giants. 

This shift will enable ARM to capture a much larger slice of the value chain. 

According to CEO Rene Hass, this new chip business alone could generate a staggering $15 billion in annual revenue within five years. 

By targeting “agentic AI,” Arm Holdings is positioning itself as a primary competitor to legacy x86 platforms, promising double the performance per rack. 

Does Arm Holdings Justify its Premium Multiple?

Raymond James analyst Simon Leopold also sees ARM’s transition into a fabless semiconductor model as a “game-changer” for its long-term earnings power. 

In a research note dated March 25, Leopold improved his recommendation for the British company to “outperform,” saying moving beyond royalties to direct sales will yield much higher operating profits. 

With Meta Platforms (META) already signed on as a lead partner and other tech giants like OpenAI and Cloudflare (NET) in the pipeline, AGI “adds a new dimension” to the growth strategy and helps justify the premium multiple on Arm stock. 

The AI name is currently trading decisively above its major moving averages (MAs), reinforcing that it’s in a strong uptrend that’s unlikely to fade in the near term. 

ARM Shares Remain a ‘Buy’ Among Wall Street Firms

Other Wall Street analysts also agree with Leopold’s constructive view on ARM shares.  

The consensus rating on Arm Holdings sits at “Moderate Buy” currently with price targets going as high as $210 signaling potential upside of another 30% from here.