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Arm Holdings (ARM) climbed 10% as it went live on Nasdaq today – a day after the chip design company priced its initial public offering at $51 that valued it at $54.5 billion.

Pro sees Arm stock as expensive

Arm is expected to be the biggest tech IPO of 2023.

After all, it’s a company that powers almost every smartphone in the world. Still, Ben Harburg – the Managing Partner of MSA Capital said this morning on CNBC’s “Worldwide Exchange”:

Overall, I think it’s really fully priced. It seems expensive to me. It’s trading at 20 times revenue, the same as Nvidia. [But] it’s growing at high-single-digits, Nvidia at over 100%.

He also cited geopolitical risks for his cautious view on Arm Holdings. While many see artificial intelligence as a material tailwind for the chip designer, Harburg emphasized that it’s not generating any revenue from AI for now.  

China is a real risk for Arm Holdings

Also on Thursday, Rene Haas – the Chief Executive of Arm told CNBC that the company’s subsidiary in China that it directly owns about 5.0% of only was doing well.

Still, a senior Bernstein analyst – Sara Russo attributed at least some risk to Arm China even though it she agreed it has been a successful business so far. On “Worldwide Exchange”, she said:

Arm China is their only way to sell in China. But it’s not without risk considering they don’t have direct control over that entity and they don’t maintain customer relationships in China.

Earlier this week, Taiwan Semiconductor Manufacturing Limited announced plans to invest up to $100 million in the initial public offering of Arm Holdings.

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