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Arm Holdings PLC (Nasdaq: ARM) sure has found huge success ever since its debut in September of 2023 – but it may not be an all-clear signal for tech IPOs, says Avery Marquez of Renaissance Capital.

Marquez shares her view on the IPO market

Shares of the chip design company has nearly doubled in recent days after reporting a solid quarter.

$ARM also cited artificial intelligence as it issued a rather impressive guidance for the future last week. Still, Avery Marquez said in a recent interview with CNBC:

 

Arm is somewhat a unique business. While its recent performance might not be a green light for all tech IPOs – it’s a positive sign maybe for chipmakers especially for those looking to play an AI angle.

The IPO market is picking up lately because factors like higher interest rates and geopolitical tensions are not a shock anymore, she added.

"As Reddit shows us, the stars are aligning for a solid pick-up in 2024 and 2025," Renaissance Capital's Matthew Kennedy says on potential IPOs that will breathe life back into the market. pic.twitter.com/D7Vn7RFDS1

— Yahoo Finance (@YahooFinance) February 5, 2024

Is Arm stock worth buying at current valuation?

Note that Charles Shi of Needham & Company recently dubbed the current valuation of Arm Holdings a “head scratcher”.

Speaking with Yahoo Finance on Monday, he questioned whether the Nasdaq-listed firm can materially benefit from artificial intelligence considering its exposure to Gen AI “remains quite small”.   

It is also worth mentioning here that ARM is currently trading at about a 100% premium to Nvidia Corp – that’s broadly seen as the primary beneficiary of the ongoing AI mania.

That’s perhaps why famed investor Jim Cramer also recently said that investors buying ARM stock following the post-earnings rally “truly have no idea what they’re doing”.  

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