The Biggest AI IPO of 2023 is Finally Here (VIDEO)

Ryan Troup September 12, 2023Last Updated: September 18, 2023

2 2 minutes read

Last Updated: 18.9.2023 21:05

The Who, Why, What, Where and When Investors Need to Know About the Most Anticipated IPO in Years

In what’s being called the biggest IPO of the year, British AI chip designer Arm Holdings is slated to make its trading debut on the NASDAQ Thursday morning. Arm, which undoubtedly has been the hottest ticket IPO in recent years, will have the eyes of the investing world on it when it begins trading on Thursday, September 14, 2023, under the ticker symbol NASDAQ: ARM.

After raising a cool $5 billion in new capital on the back of its IPO, which was oversubscribed by a factor of 10, Arm is expected to go public at a price of $47 – $51 per share, which would give the AI chip maker a lofty market capitalization of $54.5 billion.

Arm is a wholly-owned subsidiary of Japanese investment fund SoftBank (OTC: SFTBY), which, in 2016, acquired Arm for approximately $32 billion. Following Thursday’s Arm IPO, SoftBank is expected to hold around 90.6% of the public shares.

Source: Bloomberg Television YouTube

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Arm vs Nvidia

Thanks to a red-hot AI sector, led stock market darling Nvidia (NASDAQ: NVDA), which has soared +213.45% YTD, it appears the Arm IPO is well timed. Arm, whose chip design is in virtually every smartphone in the world, should draw plenty of investment interest from other tech sector titans such as Alphabet (NASDAQ: GOOGL), Apple (NASDAQ: AAPL) and Advanced Micro Devices (NASDAQ: AMD).

While not expected to see an AI boom boost as pronounced as Nvidia, which attempted to acquire Arm earlier this year before the deal fell through, Arm should see significant investor demand in the market after having its IPO oversubscribed by a factor of 10.

However, the Arm IPO is not without risks, which the company highlighted in its registration statement filed with the SEC. The main risk cited by Arm was its exposure to the Chinese market amid the country’s ongoing geopolitical tensions with the United States.

Arm China, a separate business entity from Arm Holdings, which the company does not control, made up almost 25% of its fiscal 2023 revenue, which saw Arm generate total revenue of $2.7 billion. Arm was also profitable in fiscal 2023, posting net income of $524 million, down 4.5% year-over-year from $549 million.

In addition, Arm’s expected IPO market valuation of $54.5 billion, which would see the stock trade at 20x revenue, has been called “very, very expensive” by analysts such as Morningstar’s Javier Correonero.

With many of Arm’s peers, with the exception of Nvidia, trading at around 12x – 15x sales, only time will tell how the biggest IPO of 2023 shakes out.

Stay tuned.

Learn more about Arm Holdings: Website | About Arm | News

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