Arm Holdings PLC (NASDAQ:ARM) announced its first in-house full merchant silicon, the AGI CPU, which expands its total addressable market (TAM) by around 40x from fiscal 2026 to 2031, according to BofA Securities.

The Arm Holdings Analyst: Analyst Vivek Arya maintained a Neutral rating, while raising the price target from $140 to $155.

The Arm Holdings Thesis: The lead customer for the AGI CPU is Meta Platforms Inc (NASDAQ:META), "with OpenAI and other neocloud/telco customers engaged," Arya said in the note.

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The full chiplet expands Arm Holdings' TAM from around $2.4 billion in royalties in fiscal 2026 to about $100 billion in full chiplet in fiscal 2027, the analyst stated.

The chip revenue outlook is around $1 billion in fiscal 2027 and 2028, around $2 billion in fiscal 2029, and up to $15 billion by fiscal 2031, he added.

The company's chip business "is incremental to existing IP/royalty businesses," including the SoftBank (OTC:SFTBY) project, Arya mentioned.

"Most gross profit from chip sales flow straight to EBIT as much of the R&D has already been done," he further wrote.

ARM Price Action: ARM Holdings shares were up 20.14% at $162.13 at the time of publication on Wednesday, according to Benzinga Pro data.

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