Arm tries to piggyback on the AI gold rush

Following an extended drought in tech listings, the impending IPO of Arm is the talk of the town in Silicon Valley and Wall Street these days. Ever since the sale of the UK-based chip designer to Nvidia fell through, tech executives and investors alike have been eager to find out how the linchpin of the mobile semiconductor realm intends to proceed. But now that the moment is here, the hotly anticipated IPO is stirring up quite a bit of controversy.

The bone of contention is Arm’s valuation. Softbank, which took Arm private in 2016, is looking north of 60 billion dollars. That’s a hefty price for a company that would be worth closer to half that when applying the industry-average price-to-sales multiple. What could justify that kind of premium?