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Arm Holdings has shone lately. But beware, Wall Street is not so sure. Some analysts think it is overvalued. Quite a bit.
The company has grown rapidly in data centers. Companies want energy-saving servers. Arm has gained ground. Intel has lost. AMD has also risen a bit.
Arm's CEO, Rene Hass, is excited. He says that AI is creating a crazy demand for efficient power. And it seems that Arm is the answer.
But the numbers are crazy. Arm is trading at 94 times its adjusted earnings. It's expensive. It's expected to grow by 23% per year until 2027. It doesn't add up. Its PEG ratio exceeds 4. That is usually a sign of overvaluation.
And there is more. It is priced at 39 times sales. It is the third most expensive in the Nasdaq-100. Crazy.
Will it fall by 46%? Maybe not. Unless everything collapses. But it's expensive. Very expensive. Better to wait to invest in Arm. Patience.