Bank of America resets Arm stock forecast after earnings

The forecast comes with a catch

The problem for investors is that Bank of America already sees a lot of that optimism built into the stock. The firm said Arm’s agentic CPU ramp is generally priced in, which helps explain why the price target moved higher while the rating stayed Neutral.

Bank of America now models non-GAAP EPS of $2.07 for fiscal 2027, $2.84 for fiscal 2028, and $3.77 for fiscal 2029. Those estimates were raised from the firm’s prior outlook, with the biggest change coming in fiscal 2028 and fiscal 2029 as Arm’s AI and chiplet opportunities start to carry more weight.

The valuation still leaves limited room for error. Bank of America said its $245 price objective is based on 69 times its calendar 2028 non-GAAP EPS estimate. The firm noted that the multiple sits within Arm’s historical trading range of 35 times to 92 times, while also reflecting the company’s transition toward a mixed intellectual property and chip business.

Supply limits could cap near-term upside

Bank of America said demand for Arm’s AGI CPU opportunity in fiscal 2027 and fiscal 2028 has doubled over the last six weeks to about $2 billion from $1 billion. That level of demand could support the bullish case for Arm, especially as AI infrastructure spending continues to broaden beyond GPUs.

The firm said limited supply availability across wafers, substrates, memory, packaging, and other inputs is keeping a lid on near-term upside. Management also maintained its older $1 billion near-term royalty and chip outlook, despite the sharp increase in potential demand highlighted in the note.

Bank of America said Arm continues to expect 15% AGI CPU market share by fiscal 2031. Still, the firm believes that the target could be aggressive given competition from x86 and custom Arm-based offerings. Bank of America models a more realistic 5% to 7% share over time, partly because key potential customers such as Meta, OpenAI, and others already have multi-sourcing agreements across CPU vendors.

Arm’s long-term opportunity faces a valuation test

Bank of America still sees a meaningful opportunity for Arm as AI demand expands, data center content grows, and the company builds toward a larger role in custom silicon. The firm’s raised estimates and higher price target show that Arm’s growth profile has improved since the prior forecast.

The Neutral rating reflects a more cautious view of how much of that growth investors can still capture from here. In the Bank of America note, the firm said Arm’s AI CPU ramp is on track, but its valuation, supply constraints, and ambitious long-term share assumptions leave less room for the stock to surprise to the upside.

Related: Arm stock’s AI push hits key chart test

This story was originally published by TheStreet on May 8, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.