Arm shares are rising premarket as Nvidia upends its AI bets

Shares of a British semiconductor company listed in New York arm The U.S. dollar rose 1.4% in premarket trading on Wednesday, documents showed Nvidia sold his share in the company he once wanted to buy.

At the end of the third quarter, Nvidia held 1.1 million Arm shares worth $155.8 million. The chip giant’s filings with the SEC on Tuesday showed it had dumped the stock.

Nvidia has held shares in Arm since 2023, but reduced the size of its stake toward the end of 2024, according to previous SEC filings.

If poor debuted On the Nasdaq in 2023, the company’s chief financial officer, Jason Child, told CNBC that Nvidia was among a group of strategic investors who collectively purchased $735 million worth of Arm shares. Apple, Google, Samsung And TSMC also belonged to this cohort.

Nvidia’s investment in the IPO came after its bid to buy the company outright for $40 billion failed agreed between Nvidia and Arm’s then owner SoftBank back in 2020. The takeover ultimately fell through in 2022 due to regulatory hurdles on both sides of the Atlantic.

Arm – whose trading partners include tech giants MetaGoogle, Microsoft and Amazon – now has a market capitalization of around $135 billion, according to LSEG data.

Shares of Nvidia rose 2% in premarket trading, extending Tuesday’s gains that caused the stock to break a two-day losing streak.

However, Nvidia’s exit from its stake in Arm does not mean the end of relations between the two companies.

After the takeover bid failed in 2022, Nvidia retained its 20-year license with Arm, with Nvidia CEO Jensen Huang stating at the time that the company “will continue to support Arm as a proud licensee for decades to come.” Nvidia’s Grace CPUs, which the company describes as “the foundation for next-generation data centers,” are based on ARM technology.

Arm reported its fiscal third-quarter results earlier this month. Revenue rose 26% year-over-year to $1.24 billion, beating analysts’ expectations. In a note after the results were released, Morgan Stanley analysts said Arm’s report showed “the momentum of the AI project” and confirmed high operating costs, “suggesting the company is building for long-term demand.” However, Stocks fell in after-hours trading following the earnings release, with analysts noting the slight improvement in Arm’s forecast. The stock is up 16% so far this year.

Morgan Stanley is overweight Arm and has a $135 price target on the stock – a premium of just over 6% to Tuesday’s closing price.

Nvidia is still a major investor in the technology space. Documents filed with the SEC show that the company owns a large stake in it core tissue, Intel, I won’t, Nokia And Table of contents End of 2025.

The first step was the $1 billion stake in the Finnish telecommunications company Nokia, which the company added to its portfolio announced in October.