Liontrust Sustainable Future Managed Fund on Arm Holdings
Thesis
Liontrust bought Arm for its royalty-based processor-design business and growing use of its architectures outside smartphones. It expects long-term computing demand to support adoption in cloud, automotive and AI infrastructure. Arm’s established ecosystem and high-margin royalty revenue give the model attractive economics. The energy efficiency of Arm-based CPUs is especially relevant in power-intensive AI data centres, expanding the company’s addressable opportunity.
“As AI workloads grow, the energy efficiency of Arm-based CPUs is helping drive adoption in data centres, significantly expanding its opportunity in this large and growing market.”
Key risks
- A slowdown in AI and cloud computing investment that could temper demand for data-centre processors.
- Technology-sector volatility and the risk that the AI trade changes market leadership.
- Higher bond yields weighing on valuations of long-duration growth businesses.