Arm Holdings shares rose in premarket trading after Bank of America upgraded its long-term outlook for the chip designer's central processing unit market share. Analyst Vivek Arya noted that AI inference workloads are increasingly CPU-intensive, creating new opportunities for Arm in the data center market. The bank now estimates the AI data center total addressable market at about $1.4 trillion.

BofA projects the server CPU market could more than double to $60 billion by 2030, growing at a 17% compound annual rate, with AI servers accounting for nearly 70% of that total. The bank sees potential for Arm to capture 20-25% of this market by 2030, up from its previous 15-20% forecast. This outlook is supported by Arm's record 11.9% server value share in Q4 2025.

BofA also highlighted Arm's planned expansion into merchant CPUs, which could expand its addressable market by 30-fold through chiplet technology. However, the bank cautioned that potential loss of $800 million in annual SoftBank licensing revenue could offset some medium-term benefits. Despite raising its price target to $140, BofA maintained a Neutral rating, citing the improving long-term CPU share opportunity as the primary driver of its revised outlook.