Investing.com -- Shares of Arm Holdings (NASDAQ: ARM) have jumped 13% premarket on Wednesday after upbeat assessments from analysts, who said the company’s first internally built processor marks a major expansion of its business model and long-term earnings power.

Raymond James analyst Simon Leopold upgraded Arm to Outperform with a $166 price target, citing the company’s move “to include a fabless semiconductor element.”

He said the shift “would yield strong operating profit, aid growth and add a new dimension to the strategy,” adding that Arm has raised its outlook with FY28 earnings of $3 a share and FY31 reaching $9.

The firm highlighted the debut of Arm’s AGI CPU, co-developed with Meta, which plans to deploy it alongside its MTIA accelerator.

Raymond James stated that the chip’s Neoverse V3 cores and high-bandwidth architecture deliver “2x the performance of x86 CPUs” in its high-end reference setup and are designed for agentic AI workloads.

“Meta has committed to multiple generations. Additionally, Arm has confirmed deployments with others including Cerebras, Cloudflare, F5, OpenAI, Positron, Rebellions, SAP, and SK Telecom,” noted Leopold.

Wolfe Research analyst Chris Caso told investors in a note that the AGI CPU represents Arm’s entry into the “>$100bn merchant CPU market,” predicting the processor could ramp to $15 billion in revenue by FY31.

Caso noted Arm “feels comfortable with in excess of $3 of EPS by FY28,” exceeding his prior estimate.

Both firms believe rising agentic AI demand and Arm’s expanding customer pipeline point to a materially larger long-term opportunity.