Initial public offerings and technology stocks have run up this year to expensive levels, while the rest of the market has room to catch up.
The company’s prospects revealed sales of about $2.7 billion in fiscal 2023, down a bit year over year on the back of a weak smartphone market. Analysts who cover Apple expect smartphone growth in 2024 in the low-single-digit percentages as consumer demand stabilizes and an upgrade cycle kicks in. That could bring Arm’s sales to somewhere close to $3 billion.
This valuation exuberance is even leading Instacart to lift its targeted offering price, as the company sees that investors are probably willing to pay a high price. The company is now eyeing a level that reflects a $9.9 billion market value, up from $9.3 billion, previously. Driving that multiple, in part, is the advent of artificial-intelligence advancements, which has boosted profit growth estimates. That is pushing more money into these IPOs—making them more expensive—since so many Nasdaq 100 stocks have already risen on the back of AI trends. Basically, investors looking for growth opportunities outside of the Nasdaq 100 are clamoring for anything else they can find.