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Arm overtakes HSBC, Unilever to become Britain's 4th most valuable company after shares rocket

 (Arm)
(Arm)

Arm has overtaken both Unilever and HSBC to become the 4th most valuable UK-headquartered company after its Nasdaq-listed stock soared when markets opened on Wall Street.

The Cambridge-based chip designer saw its shares close up some 30% by the end of the day’s trading session in New York, giving it a market value of more than $150 billion and putting it behind only UK-headquartered oil giant Shell, gas giant Linde and fellow Cambridge firm AstraZeneca.

Arm shares have more than doubled since the start of the year as investors were enthused by signs of a rebound in the smartphone market for which it is the predominant chipmaker, as well as hopes raised for the adoption of its technologies in artificial intelligence.

Arm is now within touching distance of overtaking the market value of Intel, America’s best-known semiconductor firm, which is worth around $180 billion.

Arm was first listed on the London Stock Exchange before being taken private by Japanese firm SoftBank in a £23.4 billion deal in 2016. The semiconductor designer was then floated on the US-based Nasdaq exchange in September last year for more than double the value.

James Ashton, former Business Editor of the Standard and author of The Everything Blueprint, which chronicles the history of Arm, said: “CEO Rene Haas has talked a lot about AI potential on the [fundraising] roadshow and in the IPO prospectus and I think there was a lot to prove at that stage.

“But in its last trading update Arm showed that it could capitalise on AI demand and investors took the smartphone market recovery as another positive.

“Having a bit of AI stardust certainly helps, but as excited as we get on the new stuff for Arm, the smartphone has been the hardy perennial for the company and consumer electronics still account for the biggest share of its revenues.”

In its third-quarter earnings report, published last week, Arm sailed past analyst expectations, posting revenue growth of 14% on the previous year to $824 million, against predictions of 5% growth.

Adjusted earnings per share jumped 32% to $0.29, ahead of estimates of 14% growth.

“Arm is the foundational compute platform for the world’s innovations. It is impossible to build an intelligent electronic device without a CPU, and more chips with Arm CPUs have been delivered in the last decade than any alternative,” the firm said.

“This virtuous cycle of more CPUs drives more software development on the Arm CPU platform which, in turn generates more demand for our technology. And with so many applications moving to AI, we expect this demand to accelerate.”