Leading chip designer ARM Holdings (ARM.US) reported better-than-expected fiscal Q2 results and full-year guidance, prompting Wall Street analysts to issue bullish ratings.

For Q2 FY2026 (ended September), ARM's total revenue surged 34% year-over-year to $1.14 billion, exceeding the consensus estimate of $1.06 billion. Operating profit jumped 155% to $163 million, with an operating margin of 14.4% (up sharply from 7.6% a year ago). Net income rose 122% to $238 million, while adjusted EPS of $0.39 beat expectations of $0.33.

The strong performance was driven by the rapid expansion of AI data centers globally, which are deploying ARM-based architectures to handle massive AI training and inference workloads. Major cloud players like NVIDIA, Amazon, Microsoft, and Google are accelerating adoption of in-house ARM-based server CPUs, fueling ARM's growth.

ARM issued robust guidance for Q3, forecasting revenue between $1.175 billion and $1.275 billion (midpoint $1.225 billion vs. consensus $1.1 billion) and adjusted EPS of $0.41 (above the $0.35 estimate).

Following the earnings release, multiple Wall Street firms raised their price targets: - Mizuho maintained an "Outperform" rating, lifting the target from $180 to $190, citing strong V9 adoption and data center momentum. - JPMorgan reiterated an "Overweight" rating, raising the target from $175 to $180. - Wells Fargo kept an "Overweight" rating, increasing the target from $190 to $195. - Deutsche Bank maintained a "Hold" rating but raised the target from $130 to $150. - Jefferies hiked its target from $173 to $205.

Needham retained a "Hold" rating, noting ARM's outperformance was partly due to early smartphone royalty recognition and accelerated data center growth. Analysts highlighted management's cautious stance on ASIC strategy but optimism around SoftBank-driven collaborations like OpenAI/Stargate.