The surge would put the British chip designer’s market value at over $100 billion as investors gobble up the stock as another way to bet on AI

Arm Holdings shares soared more than 55% on Thursday, on track for their best day since a blockbuster market debut in September, powered by strong forecasts on demand for its technology to design chips for AI features.

The surge would put the British chip designer’s market value at over $100 billion as investors gobble up the stock as another way to bet on AI. The rally represents a dramatic shift from its first month as a public company in late 2023 when shares dipped.

Executives said on Wednesday customers were flocking to Arm-based central processors to complement Nvidia’s chips for artificial intelligence work in data centres, and it was working on new laptops and smartphones that can handle chatbots and other artificial intelligence features.

Arm’s technology is not directly used in the AI work, but firms such as Nvidia are choosing it for central processing units (CPUs) that complement their AI-specific chips.

Arm is riding on the coattails of demand for Nvidia’s technology, especially its datacentre systems, according to Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Arm is key to the chipmaking space, as it sells blueprints and other intellectual property to create computing chips that power most of the world’s mobile phones. The stock declined 26% of its value within a month of its September 14 debut, but it has soared around 90% since then to $120.80 on Thursday.

The market is starting to have a better handle on their business model and how that aligns with some of the bigger chip design trends over the next few years, according to analyst Ben Bajarin from Creative Strategies.

He added: I know there is some scepticism over the value but I think people are starting to understand how deeply intertwined Arm IP is to much of the growth sector of the industry.