Zacks Rank #3 (Hold) stock ARM Holdings ( ARM ) is a dominant player in the semiconductor industry due to its energy-efficient designs, which are critical to the function of smartphones, laptops, and AI servers. Last night, President Donald Trump announced new investments in an AI infrastructure project dubbed “Stargate” that should act as a bullish catalyst for the stock moving forward. In fact, Wall Street tech analyst Dan Ives lamented,” We believe this is the start of a wave of massive AI investments ($1 trillion more) to take place in the US.”

What is “Stargate”?

Stargate is a $500 billion infrastructure initiative that is supported by the Trump administration. ARM has partnered with some of the world’s foremost AI companies, including OpenAI, Nvidia ( NVDA ), Oracle ( ORCL ) , and Microsoft ( MSFT ). Stargate aims to build a next-generation “AI supercomputer data center.” With such strong partners and the backing of Pennsylvania Avenue, Stargate should act as a bullish catalyst for ARM for several quarters to come.

Strong Industry Group

The general market’s direction and a stock’s industry group are the most critical high-level ingredients to weigh when looking at a stock. 75% of stocks follow the market’s direction. With U.S. equities at all-time highs, it’s impossible to argue that equities are not in a bull market phase. Investors also want to track the top industries because industry group rank because birds of a feather flock together. ARM is a member of the Zacks “Technology Services” industry, which ranks in the top 27% of industries tracked by Zacks.

Sound Fundamental Backdrop

Though ARM shares have come down to Earth after an explosive debut, the company’s fundamentals are very much intact. In 2024, ARM delivered annual earnings that grew 97% year-over-year. Meanwhile, ARM has eclipsed Zacks Consensus Estimates for five quarters in a row since going public, with an average positive surprise of ~18%.

Bullish Chart Pattern

The easiest way to find the next stock to double is to look for stocks that already have. ARM is up more than 100% since its IPO in late 2023. After a long and frustrating consolidation, ARM is poised to rotate on its long-term quarterly chart. As a result, the stock should see a pre-earnings run, and should the company continue to deliver positive earnings, an eventual return to all-time highs.

Bottom Line

With a fresh bullish catalyst and Washington DC’s blessing, Arm Holdings has all the attributes of a potential big winner.

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