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Analysts underestimated how quickly AI would grow: Arm CEO

Arm Holdings (ARM) was added to the Nasdaq 100 (^NDX) on Monday as shares are up nearly 140% since its public debut in September. Arm Holdings CEO Rene Haas joins Market Domination Overtime to discuss the milestone and the British semiconductor company's outlook.

Haas states that AI "is going to really, really change people's lives in terms of productivity, whether that's call centers that can become 100% automated, healthcare, bio-research where you can cut the research of a cancer drug from ten years to five years to three years. This is all going to be capable with AI. And then every device that we use, the data center, the automobile, your PC, your smartphone, they all need to run AI. There's no quibble around that."

He notes that 70% of the world's devices use Arm chips, positioning them well in the overall AI race. He adds, "I think respectfully, the analysts maybe didn't quite understand or have an appreciation at the pace of which things were moving," pointing to how quickly AI has grown. He believes the technology will be a tailwind for both smartphones and Arm, stating, "Since most of these devices are already Arm-based and the software runs on Arm, it's pretty natural that we're going to be in the center of all of that."

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.


This post was written by Melanie Riehl

Video transcript

Moving on arm holdings getting added to the NASDAQ 100 today, the British semiconductor company will also be incorporated in several other NASDAQ indexes.

Shares of arm up nearly 100 and 40% since its public debut back in September, Haas arm holding CEO joining us now, Renee, it is good to see you and, and maybe start on that news, Renee, I'm just interested in how you, you know, how you think about it.

What does it mean for arm to be included like this?

Do you see it, Renee as you know, maybe a kind of milestone for the company.

What, what are you telling your team?

Well, uh thanks for having uh having me.

It's certainly a milestone.

It's something we're, we're proud of.

Uh the NASDAQ 100.

That's a, that's an elite company.

So for arm to be included on it, it's a, it's a very, very cool day and the employees and company are excited and so as you have this day and you're excited, I am curious because there's been so much talk lately, Renee about retail investors, right?

We've seen some glimmers again in the market of the meme stock trade.

I think Tesla is a part of this phenomenon as well with its retail stock, uh retail shareholder participation in its recent vote, for example.

So how are you thinking about that cohort of people who are interested in, in potentially owning arm holding stock?

You know, honestly, I don't think about it that much.

Uh My focus is really on the strategy trying to grow the company.

Uh One of the things I love most about my job is that I'm usually having discussions about technology in 2026 2027 2028.

Uh thinking about, you know, the question you just asked, I, I understand the question but it's actually not where I spend a lot of my focus.

Uh Renee, let's talk about one area I'm guessing is a focus for you, which is the mega trend of A I, you know, Rene we spend so much time on this show, of course, talking about it.

Investors are very excited and I, I know Renee, you, you know, I would argue, I'm sure, you know, um I think in fact, the last time we spoke, Renee, you said, you know, basically you can't run A I without ac pu can you just walk us through Renee?

You know how you think about the opportunity for arm here?

How, how big is the opportunity when we talk about this mega trend of A I?

How do you quantify it, Renee?

Yeah, I think that Uh And, and I was around, you know, during uh era, in fact, to kind of started even in the late nineties with the browser and then the build out of the internet.

Uh To me, this is much more profound uh because what A I is going to do is that it is going to really, really change people's lives in terms of productivity, whether that's call centers, it can become 100% automated uh healthcare, uh bioresearch where you can cut the research of a cancer drug from 10 years to five years to three years.

This is all gonna be capable with A I and then every device that we use the data center, the automobile, your PC, your smartphone, they all need to run A I there, there's, there's no quibble around that.

And since 70% of the world's devices today use arm and they have to use A I on top of the arm based platform already.

It's just natural that we're going to be involved in it.

So it's something we spend a lot of time on.

But I don't think it's hyped at all.

I think it is going to be something that uh when we look back in terms of what the capabilities are and what it unleashes, it's gonna be a momentous time in history.

Well, Renee, it's so interesting the relationship between A I and arm because I gotta tell you coming up to the drumbeat of your IP O last September when there was a lot of talk about A I, we were talking to a lot of who were saying A I is not really the story for Arm yet that it's still early.

And so it seems though that you have been gaining a little steam in that area.

So can you tell our, our listeners and viewers right now kind of where you are for Arm in that cycle?

Yeah, I thank you for the question.

I think respectfully, uh the analyst maybe didn't quite understand or have a, an appreciation at the pace at which things were moving.

Uh There was a belief that A I meant you're running a large language model in the data center.

But if you look nine months later, we have an A I PC, we had Chet Chet G BT 40 running on a mobile phone doing voice recognition, which is being done in conjunction with the cloud and the local device.

You have Gemini uh an A I tool that runs on your cell phone.

Nobody was talking about those things a year ago and to be fair, it's not because the analyst didn't understand it.

It's just the pace that this is how this is moving.

And by definition, uh because of all the investments taking place in terms of training, all that training needs to find its way into applications.

And most of those applications will be in your handheld devices.

Or your consumer devices.

So I think even the analysts probably didn't have a sense of just how fa how fast things are going.

And one of the things we'd like to talk about is that software is moving far faster than the hardware.

So I think that's the key learning that we've seen and, and perhaps the analysts as well.

And Renee, let's talk, let's talk smartphones as well.

I'm just get your take because you know, we, we've had analysts um come on the show, Renee and say, listen, they, they think A I is gonna prove to be a real tailwind for the smartphone market, at least, you know, the premium segment is that how you see it, Renee and what, what would that mean for or I think it will be a tailwind.

You know, remember that these smartphones iterate every single year and they add new and new technology which puts a lot of strain on the system in terms of battery performance heat.

Now, when you have to run A I applications in addition to all the applications you were running before, uh that's a complex design problem.

It's also a problem that arm is very, very good at solving.

And since most of these devices are already arm based and the software runs on arm, it's pretty natural that we're going to be in the center of all of that.

So uh we're pretty excited about the tailwind, not just for phones, but for a IP CS, uh automobiles, consumer devices.

I think all of them are going to see a tailwind in the next number of years.

Renee, it seems as though when you talk about the speed at which things are moving, that the speed has maybe moved a little bit more on the enterprise side, we've seen an enormous amount of demand on the consumer side, perhaps less so.

And so I'm curious to get your take because you're so enmeshed with this, what sort of the killer app on the consumer side could potentially be for A I or the killer use case?

Yeah, I, I don't think we know yet is the honest answer.

If you think about the, the move from three G to four G, you know, a number of years ago, no one could tell you that the killer app was gonna be, uh, I now can order a car on demand.

That'll know where I'm standing or I can now get a rental property at a very, very low discount and I can find them all very quickly.

But that's Airbnb and Uber, you know, those, those apps were unleashed with four G. Now, when we think about A I at the consumer, I think first off, we need to get the hardware capable, which is happening and then the apps will follow.

But uh the history has kind of shown that that's how the model tends to work.

So I don't know that the killer app is out there yet, but I'm also very confident that it will be very soon.

Renee, it is always great to have you on Yahoo Finance.

Thanks so much for joining us.

Thank you.