British chip designer ARM could cash in on the mobile industry's rush to transition to 64-bit operating systems and hardware.
Canaccord Genuity analyst Matt Ramsey argues that ARM is still a 'Buy' stock, as it's trading at $43, while his price target is $54 to $56. Ramsay is upbeat for a number of reasons and the 64-bit craze is one o them.
He pointed out that sales of ARMv8 chips are ramping up and are no longer limited to Apple. Qualcomm's upcoming Snapdragon 810 is also based on ARMv8, along with all other upcoming 64-bit SoCs. Ramsey named Qualcomm, MediaTek and Samsung as the three biggest contributors to ARM's 64-bit business.
In addition to smartphones, ARMv8 designs are finding their way into enterprise networks and servers, creating even more opportunities. This is good news for ARM, as its royalties for processor designs based on the ARMv8 instruction set are significantly higher than for venerable 32-bit parts.
"Our year-on-year royalty growth estimates accelerate from 15% in Q4 2014 to 20% in Q1 2015 to roughly 24% for full-year 2015."