Important points
- All eyes will be on Arm stock on Monday following a report on Sunday that the British chip designer plans to launch an artificial intelligence chip in 2025.
- The company reportedly plans to establish a new AI chip unit and build a prototype by next spring, then engage contract manufacturers to mass produce chips by fall 2025.
- Arm stock is currently trading within an ascending wedge and a breakout could test $79, but a breakout could send the price higher to resistance near $145.
The stock price of UK-based semiconductor design giant Arm Holdings (ARM) will be in the spotlight from Monday onwards. nikkei asia reported on Sunday that the company plans to develop an artificial intelligence (AI) chip with the aim of launching the first polotype in early 2025.
According to a report, Arm, which is 90% owned by Japan's SoftBank (SFTBY), will set up a new AI chip division to build a prototype by spring next year, then outsource it to a contract manufacturer and build it by fall 2025. The company plans to mass-produce chips in 2020.
According to the report, most of the initial development costs, estimated to be several billion yen, will be funded by Arm, with SoftBank also planning to invest. Once the AI ​​chip business is launched, there is a possibility that it will be spun off into a separate company under SoftBank.
The Japanese financial giant has already begun talks with Taiwan Semiconductor Manufacturing (TSM) and other chipmakers to secure production capacity. nikkei asia report.
Arm continues its push into the lucrative data center market
Arm, which makes money by selling royalties on its chip designs, is leveraging the lucrative AI data that tech giants like Microsoft (MSFT), Meta, Alphabet (GOOGL) and Amazon (AMZN) are tapping into. We continue to expand into the center market. has announced plans to build its own chips to power its AI computing requirements and reduce its dependence on AI chip supplier Nvidia (NVDA).
Since going public last September, the company's stock has more than doubled from its $51 initial public offering (IPO) price as investors bet that the chip designer could capture a sizable slice of the AI ​​infrastructure market. Rose. Canada's Precedence Research predicts the AI ​​chip market will grow from $30 billion this year to $200 billion by 2032.
Monitor these levels during a breakout from a rising wedge
Arm's stock price has been in a narrow upward wedge since mid-April. Technical analysts typically interpret this chart pattern as having a bearish bias as it indicates that buying momentum is weakening. In the short term, the price is likely to continue oscillating within the wedge until the downward sloping 50-day moving average catches up with the pattern's upper trend line before the stock makes its next big move.
On the decline, investors should keep an eye on the $79 level, which could find buyers near the February breakout level. However, it is worth noting that if the price breaks above the wedge, the stock could make another attempt to test the key overhead resistance near the previous price action around $145.
Arm stock rose 5.1% during Friday trading and closed last week's trading at $108.84.
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