Arm shares edge higher in premarket as Nvidia shakes up its AI bets

New York-listed shares of British semiconductor firm Arm ticked 1.5% higher in premarket trading on Wednesday, after documents showed Nvidia sold its stake in the company it once wanted to buy.

At the end of the third quarter, Nvidia held 1.1 million shares of Arm with a value of $155.8 million. The chip giant’s filing to the SEC on Tuesday showed it had offloaded the stock.

Nvidia had held shares in Arm since 2023, but wound down the size of its stake toward the end of 2024, according to past documents filed with the SEC.

When Arm debuted on the Nasdaq in 2023, the company’s Chief Financial Officer Jason Child told CNBC that Nvidia had been among a group of strategic investors that collectively purchased $735 million of Arm shares. Apple, Google, Samsung and TSMC were also part of that cohort.

Nvidia’s investment in the IPO came after its failed bid to buy the company outright for $40 billion, a deal that was initially agreed between Nvidia and Arm’s then-owner SoftBank back in 2020. The acquisition ultimately fell through in 2022 following regulatory hurdles on both sides of the Atlantic.

Arm — whose commercial partners include tech giants Meta, Google, Microsoft and Amazon — now has a market cap of around $135 billion, according to LSEG data.

Shares of Nvidia were 2.1% higher in premarket trading, building on Tuesday’s gains that saw the stock snap a two-day losing streak.

Nvidia’s exit from its stake in Arm does not spell the end of ties between the two companies, however.

Following the breakdown of the takeover bid in 2022, Nvidia retained its 20-year license with Arm, with Nvidia CEO Jensen Huang stating at the time that the company will “continue to support [Arm] as a proud licensee for decades to come.” Nvidia’s Grace CPUs, which the company describes as “the foundation of next-generation data centers,” are built on Arm technology.  

Arm posted its fiscal third-quarter earnings earlier this month, with sales rising 26% year-on-year to $1.24 billion, above analysts’ expectations. In a note following the earnings release, analysts at Morgan Stanley said Arm’s report had demonstrated “AI project momentum” and confirmed high opex “which suggests the company is building for long term demand.” However, shares dropped in after-hours trading following the earnings announcement, with analysts noting the slight beat on Arm’s guidance. The stock is up 16% so far this year.

Morgan Stanley is overweight Arm, with a price target of $135 on the stock — a premium of just over 6% on Tuesday’s closing price.

Nvidia remains a major investor in the tech space, with its SEC filings showing it held major stakes in Coreweave, Intel, Nebius, Nokia and Synopsys at the end of 2025.

The $1 billion stake in Finnish telco Nokia that the company added to its portfolio was first announced in October.