Our stock is up 169% ever since the IPO late October last year and in my opinion the company is kind of trading at a bit and potentially a lot elevated valuations which poses danger to investors in my honest opinion and why do I say that despite my long-term view of the company being extremely positive so this is essentially as I if your investor in arm see this as a more let's say opportunity to take some profit and come back into the company when the valuations a bit more realistic so when you see this kind of headlines arm looking for 50% of Windows PC market that's obviously the foundation for the bull case for at the moment they have around 11% of the market share in Windows PC and they see and like to increase that to you know half of that market especially this is very important in the days of you know Qualcomm Snapdragon X Elite which Microsoft is launching very aggressively essentially last week with a lot of system manufacturers like Dell like Lenovo like HP and Asus and a lot of other companies so that's part of the bull case we can also see there are other kind of applications for arm for really interesting company offering a lot of course for the CPU workload for cloud especially and they are you know offering up to 192 course and I think they just updated it to 256 course which is more course compared to even the likes of AMD now obviously these are different kind of course so you can it's not Apple strapples but the important series that there seems to be some applications for arm definitely will be able to take market share from the recently AMD x86 based servers and these are important because this is essentially how arm makes their money you know based on the licensing fees and their royalties you can see that their revenue has been increasing over the past quarters let's say since 2017 so the trend is obviously a bit up and down but the big trend is you know going from around 400 million per quarter revenue to now you know just breaking almost up to 1 billion as of the most recent quarter and it's very interesting I think and you should definitely go and read this article as well the numbers are very very in my opinion promising for the company in terms of you know the company's future but remember that the company and the stock are not always the same thing and I think this is a case where the stock has kind of run ahead of the company's future so if you've been investing in this company in my opinion it's a good opportunity to take to take some nice profit whereas if you're thinking of buying this stock I think it's a bit too expensive right now because look at this the revenue on our let's say last four quarters is like 3 3.2 billion and they make what they make let's say around 200 yeah around 200 billion 200 million in income and it's no a company is valuated at right now 160 billion US dollar so it's a lot of money you know for a company and right now according to Yahoo Finance the PE ratio is 520 sure if you take non gaps you know you can you can all work this number to become much lower but still it's good it's you know it's gonna be trading above PE ratio of at least a hundred and the price-to-sales ratio I think this sets you know if you look at the number here 160 billion in revenue and actually you can also see it if you go to Main Street you can see that you know 158 billion in revenue and the currently the price-to-sales ratio is almost at 50 so this is very expensive you know the there's a lot of risk if the market takes out you know correction of 10 15 percent this kind of stocks can fall much more than that but you should be careful without without what I'm saying in this video because in my opinion there's room for arm to definitely grow you know their market share so I find for example this article very interesting you know in a previous article we mentioned that they forecast a 50% market share I think in four five six years and the interesting one here is that you know the projections that people are making for arm you can see Intel in the dark blue AMD taking a bit of market share but then kind of slowing a bit because arm is entering the race and they're taking according to this projection 25% of the market already by 2027 and that's gonna be important for for arm and why do I say that well you know arm also they are thinking about kind of changing their licensing fee and their royalty fee because there's been a bit of frustration from arm's side that you know they make for example out of all the chips that Apple sells a year this equals roughly 5% of arms entire revenue and you know Apple makes iPhones they make iPads they make you know Macs and some of the you know numbers when you look into this when you do a bit of research seems to point out to that essentially Apple pays arm 30 cents per each iOS device be it an Apple watch or you know a MacBook or whatever it is on average they pay you know roughly 30 cents per device and you know even if you make hundreds of millions of devices it's not gonna make a whole lot of money for for arm if you remember the company was having around 3 billion in revenue last year so if you take 5% of that that's what like you know 150 million of that is essentially coming from Apple so yeah they are you know they are not happy with they are not happy with kind of this kind of contracts and you know they made a point clear to Apple CEO Tim Cook but it to me if I understand it right Apple is kind of threatening arm to down the road in that case if they you know become too aggressive with the pricing kind of leave a to kind of leave arm for a risk 5 which is also another instruction set that's kind of in the long term can give same kind of advantages as arm as well but you know recently also we know that in late 2023 they kind of agreed upon a deal to continue this collaboration until 24 is and well beyond so it's yeah it's but you can see that arm is not very happy about this and for some of the other customers like Qualcomm for example or MediaTek which are the two big customers for arm in terms of revenue wise maybe not unit wise but definitely revenue wise you can see that there's been some rumors out there that instead of charging as they do right now on royalties based on the price of the you know the CPU or GPU or system on a chip because those can for example for Qualcomm the average selling price for those are around 40 US dollar so if you take let's say one or two percent of that it's gonna be you know not a whole lot of money but if now they kind of rumors are saying that they want to change that so instead of taking the royalty based on a percentage of the average selling price of the chip now you they want to take it another step up so for example if you have an iPhone instead of getting your royalty based on the CPU of the iPhone now you're gonna get it based on the price of the actual iPhone and you know that's gonna change a lot because our smartphones on average selling or as this article from Forbes saying almost 10 times higher than the average chip so even though if arm is not gonna be able to know get the same amount of percentage because 1% or 2% of 40 40 US dollar maybe they can get you know 0.5% of 300 400 but that's gonna you know increase their revenue by two three four times so there's definitely a potential for arm to increase their revenue substantially you know over the coming years and I think you know what I mentioned I do see for example arm servers taking market share I do see for example arm laptops taking market share so then there's the additional you know the Internet of the things you know the your smart you know home units you know your smart subwoofers your smart whatever it is you know so there's gonna be a whole lot of different stuff that's gonna be online in the coming 10 years so the company I'm very positive on but the stock price not so much and but again for the company is very you know this is a very unique company as we can see that in the light blue and the dark blue are some of their some of their for example the royalties that they are still getting not years after you know a product is launched we are talking like decades look at the light blue for example so in 2023 they are still getting revenue and royalties based on some of the products that was launched already in the 1990s I just think about that you know and together with the stuff that was launched in 2009 and 2013 so essentially a decade ago and anything past that that's like 46% of the revenue basis now if my thinking is correct you know if they manage to get market share in the laptops and if they manage to change the pricing from let's say a CPU based royalty to a more of final product based royalty which would give them in the long term a higher revenue basis you know this kind of all their legacy revenue will be less compared to the newer revenue of the newer products but that's still important to be safe and you know know that you know this is a company that essentially have a safety net of multi years and multi decades in many cases of incoming revenue year in year out so yeah then for the company I couldn't be more positive but I think you should be careful with the price of this stock right now I think there's an opportunity to take some profit in this space and you know just relax you know go go look at the likes of Intel or AMD you know with much lesser valuation and much higher let's say near term potential in terms of stock valuation I think you know that's gonna be more interesting and if you know if we get up let's say stock price closer to a hundred I think that's gonna be more interesting or at least let's say you know just a drawback to 120 or 110 but at these prices I do think despite my very positive views on the company's future because I do believe that they're gonna force Apple and sorry Intel and AMD and also Nvidia to go into the CPU market with ARM based solutions I think that's a that's just a question of time maybe obviously not taking the entire market share because there's a lot of you know power in x86 as well but I think like the likes of AMD as I mentioned on for example my last video there's a lot of rumors suggesting that AMD is looking in ARM already so yeah that's gonna I think that that's gonna do it for today maybe not the most positive in terms of if you look in what to invest in but sometimes I think it's good also to be careful and you know look into what you should not invest in at the moment or you know maybe when it's the right time to take profit but again this is not investment advice I'm just sharing my few cents and thank you for watching please like the video and subscribe and see you in the next one