UBS and TD Cowen significantly raise their target prices for Arm, betting on a revaluation of AI data center CPUs.

According to Mars Finance, on June 25th, Arm's stock price corrected this week following the overvalued AI sector. However, some Wall Street analysts believe that this adjustment has not changed the company's long-term position in AI data centers. UBS significantly raised its target price for Arm from $260 to $470, maintaining a buy rating; TD Cowen raised its target price from $265 to $475, also maintaining a buy rating. Both institutions agree that with the development of AI, the importance of CPUs in data center architecture may increase, rather than GPUs continuing to dominate the investment narrative. TD Cowen believes that in the long term, CPUs may have a better strategic position in some AI workloads. UBS, on the other hand, emphasizes that the real debate in the market is about the revenue potential of Arm's self-developed or independent CPU business. The bank expects Arm's CPU-related revenue to reach approximately $14 billion by 2030, although the company itself states that this business will not have a substantial financial impact until fiscal year 2028. Arm's strengths lie in its low latency and energy efficiency, metrics that major cloud vendors are increasingly valuing in their AI infrastructure expansion. Even with a short-term pullback in its stock price from its highs, analysts still consider Arm one of the main beneficiaries of the server CPU upgrade cycle.