Jefferies on Wednesday reiterated its Buy recommendation for Arm and kept a $290 price target after Nvidia’s recent commentary about its Arm-based Vera CPU business, saying the remarks provide a constructive read on Arm’s royalty and long-term opportunity.
On its latest earnings call, Nvidia said it now has visibility for $20 billion of revenues this year from standalone Arm-based Vera CPUs, and that the chip creates a new $200 billion total addressable market. Jefferies analyst Janardan Menon interpreted those disclosures as evidence of rising demand for Arm-based processors in the data centre and as supportive of Arm’s royalty mix going forward.
Menon highlighted the direct royalty implications with a concise takeaway: "Nvidia has visibility for $20bn of standalone Vera CPU sales this year, which is positive for Arm’s royalty outlook." He framed Nvidia’s figures as an indicator that deployments of Arm-derived server silicon are broadening beyond existing designs.
The note points to Arm’s recent gains among hyperscalers, where the company has reached roughly a 50% share of the hyperscaler CPU market. That share has been driven in part by the uptake of the Grace family of chips within Grace-Blackwell configurations, in addition to market share tied to Graviton-centric deployments.
Looking ahead, Menon argued that a set of new deployments - specifically Vera-Rubin starting this year, standalone Vera CPU shipments, and continued growth in Graviton and Axion families - should combine to lift Arm’s hyperscaler share toward the 60% area over time. While he noted that the royalty rate on the Vera is estimated to be lower than on Grace, he expects the higher unit volumes to more than offset that gap.
Jefferies expects data centre CPU royalty strength to counterbalance softness on the smartphone side, projecting royalty growth of about 20% this year, which the analyst notes is in line with company guidance.
Beyond near-term royalties, Menon sees Nvidia’s comments as signaling a more meaningful long-term opportunity for Arm in artificial general intelligence (AGI) CPUs. He wrote that Arm’s own guidance for AGI CPU revenue - rising from $1 billion in fiscal 2028 to $15 billion in fiscal 2031 - may be conservative. Menon suggested the total addressable market could be nearer $200 billion by fiscal 2031 rather than the $100 billion-plus figure cited by Arm at its Everywhere event.
Jefferies’ forecast sits ahead of Arm’s current guidance for FY28, with the firm projecting $1.4 billion of AGI CPU revenue versus Arm’s guidance of $1 billion for that year.
Menon concluded that the investment case is becoming more tied to the AGI CPU trajectory than to baseline licensing and royalties. "We remain positive on Arm, with the market likely to price in the AGI CPU upside sooner rather than later," he said, reaffirming Jefferies’ Buy stance and the $290 target.
Contextual note: The analysis by Jefferies draws directly from Nvidia’s revenue visibility and Arm’s disclosed guidance, and it emphasizes how expanding Vera deployments and continued Graviton and Axion growth could reshape royalty flows and the longer-term AGI opportunity for Arm.