Is Arm Holdings plc (ARM) overvalued or undervalued?
Updated Nov 10, 2026 · hand-researched model · educational, not advice
At a recent price of $186.30, Arm Holdings plc (ARM) sits above every lens we ran: our valuation lenses put the business somewhere between $50.51 and $50.51 per share. They disagree too widely for us to state a single fair value. We publish the range rather than a midpoint because a number that precise would claim more than the methods can support. This is an educational model, not a price target or a recommendation.
The valuation discounts Arm Holdings plc's projected free cash flows at a weighted-average cost of capital (WACC) of 20.4%, with a long-run terminal growth rate of 2.5%. About 55% of the enterprise value comes from the terminal value — the portion beyond the explicit forecast window — which is typical for a stable, cash-generative business and a reminder that small changes in the discount rate or terminal growth assumption swing the intrinsic value meaningfully.
Running the DCF in reverse — solving for the growth the current price already assumes — ARM would need sustained revenue growth of more than 25%/yr to justify today's price, against about 16.5% a year compounded in our base case. We don't quote a precise figure here, because past about 25% a year the reverse-DCF stops being informative: it solves for revenue growth alone, holding margins, capital intensity and the forecast horizon fixed, so a price well above our fair value has nowhere to go but growth. The honest reading is that the price implies growth this model can't reconcile — not that we forecast it.
Sensitivity matters more than any single number. Across a reasonable band of discount-rate assumptions, ARM's modeled DCF value ranges from about $7.64 to $8.96 per share. If that range still sits below today's price, the market is optimistic relative to the model across the whole band; if it brackets the price, the stock is roughly fairly valued on our assumptions. Use the interactive slider to see exactly where your own cost-of-capital view lands.
How to read this page: the DCF fair value is what Arm Holdings plc would be worth if its cash flows grow as modeled and are discounted at the stated WACC. The assumptions table shows every input and its source; the reverse-DCF shows what the market believes; the sensitivity band shows how fragile the answer is. None of this is investment advice — it is a transparent, auditable framework for forming your own view of ARM's intrinsic value. Figures update as new filings and prices come in.
The assumptions behind ARM's DCF
| Input | Value | Source |
|---|---|---|
| Base-year revenue | $4,920,000,000 | FY2026 Form 20-F (filed 2026-05-26) — Consolidated Income Statements and MD&A revenue disaggregation: Total revenue $4,920M for the fiscal year ended 2026-03-31, +22.8% on FY2025's $4,007M (20-F comparative column). The filed split by offering: license and other revenue $2,307M (46.9%) and royalty revenue $2,613M (53.1%). The filed split by counterparty: external customers $3,421M and related parties $1,499M (30.5% of the total — Arm China, entities with an equity-method relationship, and other SoftBank Group affiliates; see special_cases). Filed in U.S. dollars under U.S. GAAP — see special_cases on currency. Arm reports a single operating segment, so the model is consolidated: licensing and royalties are revenue lines, not segments, and no margin split between them is filed. |
| Base EBIT margin | 18.3% | FY2026 Form 20-F (filed 2026-05-26) — Consolidated Income Statements; Q2 FY2027 Form 6-K quarterly report (furnished 2026-11-04): Operating income $900M / revenue $4,920M = 18.29%. This is GAAP, so it is AFTER share-based compensation of $1,052M (21.4% of revenue) — the single largest line between Arm's gross profit ($4,799M, a 97.5% gross margin on cost of sales of only $121M) and its operating income. The filed path: operating margin was 3.4% in FY2024 ($111M on $3,233M, the year of the RSU modification and IPO-era charges), 20.7% in FY2025 ($831M on $4,007M), 7.1% in Q1 FY2027, 13.9% in Q2 FY2027 and 10.7% for H1 FY2027 ($292M on $2,732M, including $12M of DreamBig acquisition-related expenses and a $7M disposal/restructuring charge). Non-GAAP operating margin (which adds back SBC) was roughly 41-42% for FY2026, 41.2% in Q1 FY2027, 44.2% in Q2 FY2027 and 42.8% for H1 FY2027; this model never uses it — see sbc_treatment. The base margin is the disclosed anchor only; the forecast path starts from the built FY2027 figure, not from 18.29%. |
| Forecast revenue growth | 23% → 18% → 16% → 14% → 12% | Assumption — TickerWorth's 5-year explicit forecast |
| Risk-free rate | 5.2% | FRED DGS10 — 10-year US Treasury constant maturity yield: Shared house input: the same 5.24% used by every researched model in this tracker (most recently NBIS, TSLA and ANET, 2026-10-26), held so values stay comparable across companies. The current FRED print is lower (4.96% on 2026-10-22); refreshing it for Arm alone would break comparability — it is a tracker-wide update, flagged here rather than smuggled into one company's model. |
| Beta | 3.04 | Assumption — Own regressions of ARM on the S&P 500 (VOO as the index proxy) from Yahoo price history (measured 2026-10-26; NOT re-measured at the 2026-11-04 refresh); published betas as cross-checks (Finnhub, Yahoo): Measured, post-listing only — and the listing is young: Arm priced its IPO in September 2023, so the entire trading history is about three years and no window can reach back further. The five windows in the NBIS set, measured 2026-10-26 and NOT re-measured at this refresh (the program's refresh convention — ANET and LLY likewise held beta): 2Y monthly 3.04 (24 observations), 2Y weekly 2.45 (104), 1Y weekly 2.31 (52), 1Y daily 3.55 (250), 6M daily 5.07 (126). The value used, 3.04, is the MEDIAN of the five — the APP/NBIS method (median of the measurable windows). The disagreement between windows is the story and is documented, not hidden: weekly windows cluster at 2.31-2.45, monthly and longer daily windows at 3.04-3.82 (since-listing monthly 3.82 on 37 observations; since-listing daily 2.87), and the most recent six months at measurement printed 5.07 as the stock ran to a $452.70 high and fell by half. Published cross-checks sit ABOVE the median and inside the measured range: Finnhub printed 3.94 at the 2026-11-04 refresh (3.87 at the original build) and Yahoo's published beta read 3.79 at the build — both consistent with the monthly windows rather than the weekly ones. No shrink is applied in either direction. Annualized volatility is about 77% since listing and about 80% over the last year, and the 52-week range is $100.02-$452.70: every window describes a genuinely very-high-beta stock, and even the kindest window (2.31) is extreme by tracker standards. At the published ~3.9 the value would be lower still; the explainer prices the beta lever explicitly. |
| Terminal growth | 2.5% | Assumption — House default — long-run nominal growth ceiling applied across the tracker: Shared house input (2.5%), identical in every researched model in this tracker. |
| Diluted shares | 1,070M | Q2 FY2027 Form 6-K quarterly report for the three and six months ended 2026-09-30 (furnished 2026-11-04) — Condensed Consolidated Income Statements, Balance Sheets, Statements of Shareholders' Equity and Cash Flows, and MD&A: THE CENSUS, built the way NBIS and TSLA built theirs: shares actually issued and outstanding, every component cited — REFRESHED to the 2026-09-30 pairing. The 6-K balance sheet states 1,070M ordinary shares issued and outstanding at 2026-09-30 (1,111M authorized), and the quarterly bridges tie in millions as filed: 1,064M outstanding at 2026-03-31 (the exact 20-F cover count is 1,064,055,252) + 5M issued on vesting of share-based awards in Q1 FY2027 - 1M withheld for tax = 1,068M at 2026-06-30 (Q1 FY2027 6-K equity statement), then + 2M issued on vesting in Q2 FY2027, with no shares withheld in the quarter (Q2 FY2027 6-K equity statement), = 1,070M. Each ADS represents ONE ordinary share (the 20-F cover: 'American Depositary Shares, each representing one Ordinary Share'), so the ADS price and the per-share value are the same number with no ratio conversion. Arm has NO treasury-share class and no second economic class to strip out. NOT the free float: SoftBank Group beneficially owned about 86.4% of the issued shares at 2026-05-21 (20-F, Item 7), which is why only roughly 146M shares trade — but the census is the filing's total outstanding, because SoftBank's shares are ordinary shares with the same claim; dividing the equity by the float would overstate each traded share's claim roughly sevenfold. For reference, the H1 FY2027 weighted-average DILUTED EPS count was 1,079M: dividing by it instead would print about 1% lower. The 1,070M census is used, and it will keep growing — SBC vesting added a net 6M shares in the half. |
| Market price | $186.30 | Delayed quote · as of 2026-11-10 04:57 UTC |
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Most undervalued stocks (per our valuation) · Undervalued Technology stocks · All valued stocks · Interactive ARM valuation & downloadable modelTickerWorth is an educational DCF tool, not a licensed investment adviser. Figures are estimates derived from public filings and market data and can be wrong.