Citi: Arm Makes Progress in Data Center Expansion, High Long-term Strategic Costs Remain the Main Risk

Glonghui, February 5th｜Citi analysts Andrew M. Gardiner and Daniel Schafei stated in a report that Arm (ARM.US) showed progress in expanding into the artificial intelligence data center market in its third fiscal quarter results, but also highlighted the necessity for continued investment. The company believes there are still more development opportunities ahead. However, the analysts pointed out that short-term pressure on smartphone business revenue and the high costs required to support long-term strategic positioning remain the main risk factors currently weighed by investors. The analysts said: "We believe that R&D costs have largely been priced in by the market. As cloud royalties surpass mobile revenue by the end of this decade, the upside potential for revenue will gradually become apparent, which also supports our forecasts for fiscal years 2028 to 2030 to be above market consensus."