A New Chipmaker Just Topped Micron's 2026 Return, Thanks To Nvidia

Nvidia Corp.‘s (NASDAQ:NVDA) record quarter handed the market a clear winner this week. It wasn’t Nvidia.

Shares of Arm Holdings plc (NASDAQ:ARM) climbed 38% in three sessions, leapfrogging Micron Technology Inc. (NASDAQ:MU) to claim second place in the year-to-date performance ranking of the iShares Semiconductor ETF (NASDAQ:SOXX).

The British chip designer is now up roughly 170% in 2026.

Chart: Shares Of Arm Holdings Notched Best 3-Day Rally In Over 2 Years

What Drove the Move

The catalyst stack has three layers.

At the top sits Nvidia Corp.’s record quarter, which lifted every name with credible exposure to artificial-intelligence infrastructure.

Below that, a fresh Bernstein initiation on May 18 reframed the Arm bull case. And under both sits Arm’s own fourth-quarter fiscal 2026 print earlier this month — quarterly revenue of $1.49 billion, up 20% year over year, with licensing revenue climbing 29% to $819 million.

Bernstein analyst David Dai initiated coverage with an Outperform rating and a $300 price target — a level that was about 45% above the stock when the note dropped, and is now only about 1% above where shares closed Thursday at $298.

“Arm stands out in server CPUs given its unparalleled power efficiency,” Dai said in a note to clients.

The framing matters. Dai argued that Arm sits “at the center of the renaissance of CPUs” that he sees taking hold as the AI workload mix shifts from chatbot-style large language models toward autonomous agents — software systems that handle multi-step tasks on their own.

Agentic workloads lean more heavily on general-purpose central processing units than on the graphics processors that have driven the AI trade so far. Bernstein expects the server CPU market to quadruple to $137 billion by the end of the decade.

The Hyperscaler Migration Is the Real Story

Royalty math is the part that turns a thesis into a re-rating. Arm earns more per chip on a data-center processor than on a mobile one. As hyperscalers — Alphabet Inc., Microsoft Corp., Meta Platforms Inc., Amazon.com Inc. — keep designing their own custom silicon on Arm’s architecture instead of buying x86 chips, the company’s revenue mix tilts toward the higher-royalty end of its book.

Chief Executive Officer Rene Haas said on Arm’s earnings call this month that committed customer demand for the company’s AGI CPU now exceeds $2 billion across fiscal 2027 and fiscal 2028 — more than double the figure disclosed six weeks earlier at the product’s launch.

That number is what Bernstein is underwriting. It is also what allows the bank to defend a $300 price target on a stock trading at roughly 190 times forward earnings.

Top-Performing Semiconductors In 2026

Below are the top five performers within the iShares Semiconductor ETF year to date:

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