Citigroup: Legal disputes with Qualcomm (QCOM.US) do not hinder long-term growth, reiterates "buy" rating on Arm (ARM.US)

Citigroup released a research report, reiterating a "buy" rating for Arm (ARM.US) with a target price of $200. The bank stated that Arm's long-term growth potential is underestimated by the market, especially in the areas of artificial intelligence and semiconductor capital expenditure. Despite facing legal disputes and macroeconomic uncertainties in the short term, its technological advantages and market demand will drive long-term stock performance. Citigroup stated in the report that Arm's legal dispute with Qualcomm (QCOM.US) has recently escalated. Qualcomm has accused Arm of anti-competitive behavior and has filed complaints with multiple regulatory agencies. Previously, a Delaware jury ruled in favor of Qualcomm on two out of three charges in the lawsuit, with the third charge still pending. The two parties are set to enter mandatory mediation in May. Citigroup pointed out that although the outcome of the conflict is still uncertain, a settlement during the mediation phase is possible. If the dispute is not resolved, the case may continue to the reexamination process later this year. The bank believes that Qualcomm's actions may be to gain a stronger bargaining position in mediation, while Arm has publicly denied the anti-competitive behavior accusations. However, analyst Andrew Gardiner stated that Arm is currently effectively responding to customer demands. He noted that customers are increasing their purchases of intellectual property and are willing to pay a premium for quick delivery. The company's record licensing revenue and numerous licensing agreements indicate that its sales strategy is not restrictive but actively adapting to evolving market demands. In the long term, Arm's growth potential in the field of artificial intelligence and semiconductors is a key driver of valuation.