Why Arm Holdings Stock Soared 30% in June

Shares of Arm Holdings (NASDAQ: ARM) shot up last month on a broader bullish trend in the semiconductor industry that lifted peers like Nvidia and AMD as concerns around tariffs and a potential recession simmered down, and the risk-on artificial intelligence (AI) trade returned.

There was no single news item that drove Arm stock higher, but several events combined to send the stock up 30% by the end of the month, according to data from S&P Global Market Intelligence.

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As you can see from the chart below, the stock marched steadily higher over the course of the month, easily outperforming the S&P 500.

ARM data by YCharts

The AI trade returns

There was relatively little company-specific news out on Arm last month, but the company, which is best known for power-efficient CPU architecture, is a close partner of tech giants like Apple and Nvidia, giving it a broad range of exposure across the tech industry.

The company, which licenses its architecture to those partners, is also sensitive to the economic cycle, which can drive demand. So it responded favorably to signs that the U.S. economy remained resilient, according to data, even with new tariffs in place.

In fact, one of Arm's best days last month came from Apple's World Wide Developer Conference (WWDC), where Apple announced a number of new features to its iOS software and Apple Intelligence. Apple is a major customer for Arm, and the news was enough to drive Apple stock up 4.1% on the day on its second-highest trading volume day of the month.

After Arm stock dipped briefly, it surged over the last full week of June in line with broader market gains as Mideast tension tamped down, and inflation remained modest through May, showing that tariffs had not yet had a meaningful impact on prices.

Arm closed out the month receiving a bullish note from Guggenheim, which maintained a buy rating on the stock and raised its price target from $147 to $187.

Image source: Getty Images.

What's next for Arm

Arm stock has fallen over the first two days of July as the valuation is arguably stretched following last week's gains. The company's competitive advantages are formidable due to its technological edge in power efficiency, but significant growth is already baked into the stock as it trades at a price-to-sales ratio of 41.

While the business looks like a good bet to continue growing, investors may want to wait for a more attractive price point before buying the stock.

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Jeremy Bowman has positions in Advanced Micro Devices, Arm Holdings, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, and Nvidia. The Motley Fool has a disclosure policy.