Arm Holdings: A Missed Opportunity for Nvidia in the Investing Landscape

Arm Holdings: An Overview of Nvidia's Missed Opportunity

Nvidia's (NASDAQ: NVDA) current stock market dominance can be attributed to its prowess in the booming artificial intelligence (AI) sector. However, a past acquisition attempt of Arm Holdings is being recognized as a significant missed opportunity. On September 13, 2020, Nvidia announced a $40 billion deal to acquire British-based Arm Holdings, which collapsed in February 2022 due to regulatory hurdles.

The Regulatory Landscape

• The collapse was influenced by fierce opposition from competitors like Qualcomm (NASDAQ: QCOM).
• Concerns were raised about stifled market competition if the deal proceeded.

Arm Holdings’ Current Surge

Post-collapse, Arm Holdings has gone public, achieving a market valuation exceeding $160 billion. The firm’s stock, which started trading at $60.75 on September 15, has appreciated over 140%. Year-over-year revenue for Q2 2024 peaked at $939 million, with net income growing to $223 million.

Future Outlook for Arm Holdings

Arm Holdings maintains a bullish outlook, bolstered by its partnership with Apple (NASDAQ: AAPL) for the iPhone 16 series. Analysts, such as Raymond James' Srini Pajjuri, foresee strong growth, rating the stock as “outperform” with a target price of $160.

The Implications for Nvidia

The dramatic increase in Arm’s valuation emphasizes Nvidia's missed opportunity. Had the acquisition succeeded, Nvidia could have solidified its position in the AI and chip markets against rising competition.

Nvidia’s Journey Continues

Despite the failed acquisition, Nvidia thrives, especially in AI chip production, at one point reaching a market cap exceeding $3 trillion. Currently, NVDA stock trades at $118, showing a year-to-date increase of 146%. While Nvidia continues to reward shareholders, the potential growth loss from not acquiring Arm remains speculative.