All eyes are on ARM as the chipmaker prepares to start trading in 2023’s biggest IPO. It will be a massive test of confidence in the AI boom.

ARM is preparing for a blockbuster return to the public markets on Thursday in a test of investor appetite for AI-related companies.

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ARM is set to return to the public markets with a massive IPO on Thursday.The SoftBank-owned chip designer has built its success offering designs to smartphone makers.But the company is now preparing a fresh push into the AI sector. 

British chip designer ARM is set to make its highly anticipated return to the public markets with the biggest IPO in two years as it prepares to start trading on Thursday in a key moment for the AI boom.

The chip designer, which has been privately owned since being bought for $32 billion by Japanese conglomerate SoftBank in 2016, has priced its shares at $51. This gives it a valuation of almost $55 billion ahead of its NASDAQ listing.

The public listing is a huge moment for the tech sector, which has seen an IPO drought take hold as soaring interest rates and tougher economic conditions have soured investor appetite towards tech businesses commanding premium valuations.

But the IPO is set to be a massive test of confidence in the AI boom that has taken hold since the launch of ChatGPT, with ARM desperate to make the case that it has a vital role to play in pushing AI development forward.

At its heart, the Cambridge-based business founded in 1990 is a semiconductor firm, which has made its name as a specialist in delivering chip designs with low power consumption to some of the world’s biggest smartphone makers, such as Apple.

ARM has shipped more than 250 billion chips since its inception, per details in its IPO prospectus, while SoftBank CEO Masayoshi Son has developed a vision of a world where ARM’s chips are planted in as many devices as possible.

However, a slowdown in the smartphone market, where growth has become increasingly stagnant in recent years, has led ARM to explore new growth opportunities. That has made the rising AI industry a fundamental target.

In its F1 SEC filing in August, ARM made the case that “the massive expansion of data, advanced software applications and AI are driving the need for high-performance compute capabilities” — a need it hopes to fulfill with its core processing units (CPUs.)

“The CPU is vital in all AI systems,” it said in the filing. It will be banking on others to believe that its CPUs will play a crucial part in supporting AI models of the future.

There is some hope for ARM here, as Silicon Valley chip giant Nvidia, which has played a huge role in the development of large language models underpinning AI tools like ChatGPT with its GPUs, hit a $1 trillion market capitalization in May amid outsized demand for its products.

Whether ARM enjoys a similar ride-up remains to be seen, but enthusiasm, or lack of, from investors for its offering could dictate how others in the AI industry approach their growth strategy. All eyes are on ARM.

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