ARM (#ARM)

Special Reports - 14/05/2024

14 May, 2024

The example below uses Contracts For Difference (CFDs). Calculations are only on the price of the specific instrument on the date below and calculations indicate a possible profit or loss. No representation or warranty is given as to the accuracy or completeness of this information, consequently any person acting on it does so entirely at their own risk.

ARM (#ARM) Weekly Special Report based on 1 Lot Calculation

ARTIFICIAL INTELLIGENCE (AI):

AI: ACCORDING TO THE INTERNATIONAL DATA CORPORATION, COMPANIES WILL SPEND $500 BILLION BY 2027, WHICH COULD SEE DEMAND FOR ARM’S CPU PRODUCTS: ARM designs chip architecture for all the major companies, and is the most dominant chip designer in the world. ARM designs chips for Apple, Amazon, Nvidia and AMD just to name a few.
ARM IN THE CHIP INDUSTRY: As a chip designer, ARM plays an integral role in the artificial intelligence space, as all companies that develop and sell artificial intelligence chips are likely using a chip architecture designed by ARM. While ARM is more focused on Central Processing Units (CPU) chips, its dominance is colossal. According to reports, 30 billion chips worldwide used ARM technology.

THE COMPANY:

ARM isn’t a chipmaker itself. Rather, the company is responsible for coming up with the “architectures” — or overall designs, including components and programming language instructions that other companies use to build chips. Today, 99% of smartphones use ARM processors.

EVENTS AND ANALYSIS:

BLOOMBERG ANALYSTS ARE EXPECTING THAT ARM WILL REPORT RECORD REVENUE AND EARNINGS IN 2024: According to the most recent Bloomberg analyst consensus, Arm is expected to grow revenue about 23% year-on-year, while earnings are expected to grow sharply, with analysts estimating 220% earnings growth.
ARM SHARES RALLIED 17% SINCE Q1 EARNINGS REPORT DEMONSTRATED STRONG GROWTH - REVENUE (beat): $928 million vs. $880.4 million expected. EARNINGS PER SHARE (BEAT): $0.36 vs. $0.30 expected. FORWARD GUIDANCE (Q2): REVENUE $875-$925 million vs. $868 million expected. EARNINGS PER SHARE $0.32- $0.36 vs. $0.31 expected.

SOURCE MT4

ARM ANNOUNCED THAT IT WILL PRODUCE ARTIFICIAL INTELLIGENCE CHIP IN 2025, ADDING A NEW REVENUE STREAM: According to the most recent reports, ARM is expected to venture into the chip production market, where it aims to mass produce its own artificial intelligence chips. The new business segment could generate significant revenue for the company, ultimately improving financial performance.

ARM AND NVIDIA:

ARM AND NVIDIA, HISTORICALLY, MOVE IN THE SAME DIRECTION: Nvidia and ARM have historically exhibited strong correlation in price action, with a correlation coefficient of 0.74. This is primarily because both companies operate in the chip production space, as Nvidia depends on ARM for their chip designs. Therefore, as Nvidia experiences growth in demand for chips, and its price grows, ARM price could also grow.
NVIDIA Q1 EARNINGS (WEDNESDAY MAY 22, 2024 AFTERMARKET) REPORT EXPECTED TO BE STRONG FURTHER REINFORCING STRONG CHIP DEMAND: Nvidia is on track to report its highest-ever quarterly revenue, with the Bloomberg consensus estimating $24.12B. Earnings Per Share is expected to come in at $5.25. These expectations represent a year-on-year growth rate of 235% for revenue and 532% for earnings per share respectively. However, the price could decline.

Please note that the past performance of different instruments does not guarantee future results of ARM.

PRICE ACTION:

ANALYSTS OPINIONS: Rosenblatt Securities: $180, Mizuho Securities: $160, Citi $150
PRICE ACTION: The stock has pulled back from its all-time highs ($163.80) and is currently trading at around $116. If the stock recovers to its all-time high price of $163.80 a share, the upside potential could be 41%. However, the price could also decline further.

ARM, May 14, 2024
Current Price:116.00

ARM	Weekly
Trend direction	UP
Resistance 3	200.00
Resistance 2	180.00
Resistance 1	135.00
Support 1	98.00
Support 2	95.00
Support 3	90.00

Example of calculation based on weekly trend direction for 1 Lot¹

ARM
Pivot Points	Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
Profit or loss in $	84,000.00	64,000.00	19,000.00	-18,000.00	-21,000.00	-26,000.00
Profit or loss in €²	77,790.38	59,268.86	17,595.44	-16,669.37	-19,447.60	-24,077.98
Profit or loss in £²	66,898.95	50,970.63	15,131.91	-14,335.49	-16,724.74	-20,706.82
Profit or loss in C$²	114,777.18	87,449.28	25,961.51	-24,595.11	-28,694.30	-35,526.27

1.00 lot is equivalent of 1 000 units
Calculations for exchange rate used as of 13:20 (GMT+1) 14/05/2024
Fortrade recommends the use of Stop-Loss and Take-Profit, please speak to your Senior Account ManagerClient Manager regarding their use.

You may wish to consider closing your position in profit, even if it is lower than suggested one
Trailing stop technique can protect the profit – Ask your Senior Account ManagerClient Manager for more detail

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