The Divorce Is Final
Jensen Huang has cleared the books. Nvidia Corporation has liquidated its remaining equity stake in Arm Holdings PLC. This move marks the formal end of a relationship that was once intended to redefine the global semiconductor landscape. The latest 13F filings released this week confirm the exit. Nvidia no longer holds a direct financial interest in the UK based chip designer. The market is reacting with a shrug. This was an inevitable conclusion to a failed romance.
The numbers tell a story of strategic pivot. Nvidia previously held approximately 1.7 million shares of Arm. At current market valuations, that stake was worth a fraction of Nvidia’s massive cash pile. Selling now is not about the money. It is about the optics. Nvidia is no longer just a customer or a suitor. It is a competitor. The company is building its own ecosystem that increasingly bypasses the need for traditional partnerships.
Regulatory Scars and Strategic Shifts
The failed $40 billion acquisition in 2022 remains a turning point. Regulators at the Federal Trade Commission and the European Commission blocked the deal. They feared Nvidia would gatekeep Arm’s neutral architecture. The industry rebelled. Rivals like Qualcomm and Apple argued that a Nvidia owned Arm would stifle innovation. The deal died on the vine. Nvidia paid a $1.25 billion breakup fee and moved on. They did not look back.
Nvidia’s reliance on Arm architecture remains absolute. The Grace CPU and the Blackwell platform are built on Arm’s instruction set architecture. However, owning the equity was a vestige of that failed takeover bid. By shedding the shares, Nvidia signals it is comfortable with Arm as a vendor rather than an asset. This is a cold, calculated move. It removes any lingering conflict of interest as Nvidia pushes deeper into custom silicon for data centers.
Market Performance Comparison
The following chart illustrates the divergence in market performance between the two giants over the last twelve months leading up to today, February 17, 2026. While both have benefited from the generative AI boom, Nvidia’s vertical integration has provided a steeper trajectory.
Relative Valuation Growth: Nvidia vs Arm (LTM)
The Technical Mechanism of Disruption
Nvidia is moving toward the RISC-V horizon. While Arm remains the gold standard for power efficiency, the open source nature of RISC-V is becoming too attractive to ignore. Investigative reports from Reuters suggest that Nvidia has increased its internal R&D spending on non-Arm architectures by 40 percent. This is the real threat to Arm’s long term dominance. Nvidia is hedging its bets.
The Grace Hopper Superchip was the first shot across the bow. It integrated a Nvidia designed CPU with a Hopper GPU. This eliminated the bottleneck of the PCIe bus. By using the NVLink Interconnect, Nvidia created a proprietary walled garden. They used Arm’s blueprints to build the walls, but they do not need Arm to maintain them. The licensing fees are a rounding error for a company with Nvidia’s margins.
Capital Allocation and the AI Sovereign Fund
The liquidation of the Arm stake coincides with Nvidia’s aggressive share buyback program. The board authorized an additional $50 billion in repurchases late last year. Every dollar is being redirected to consolidate Jensen Huang’s control over the AI stack. Holding shares in a vendor like Arm was a passive strategy. Nvidia is no longer a passive player. They are an aggressive consolidator of the entire compute fabric.
SoftBank, the majority owner of Arm, has also been shifting its strategy. Masayoshi Son is reportedly looking to raise $100 billion for an AI chip venture code named Izanagi. Nvidia’s exit from the Arm cap table removes a potential conflict as SoftBank prepares to compete more directly with Nvidia’s H200 and Blackwell successors. The two companies are now on a collision course in the enterprise AI market.
Comparative Financial Metrics
The divergence in their business models is visible in the quarterly yield. Nvidia operates on hardware margins that resemble software companies. Arm operates on a royalty and licensing model that is stable but lacks the explosive upside of direct hardware sales.
| Metric (Q4 2025) | Nvidia (NVDA) | Arm Holdings (ARM) |
|---|---|---|
| Revenue Growth (YoY) | 265% | 14% |
| Gross Margin | 76.2% | 95.1% |
| Operating Margin | 54.1% | 25.8% |
| P/E Ratio (Forward) | 38.5 | 82.1 |
Nvidia is trading at a discount relative to its growth when compared to Arm. This valuation gap is the primary reason for the divestment. Why hold an asset with a higher multiple and lower growth? The math simply did not support keeping the shares on the balance sheet. Huang is optimizing for return on invested capital. Arm is a great company, but it is no longer a great investment for Nvidia.
The focus now shifts to the upcoming GTC conference in March. Industry insiders expect Nvidia to announce a new tier of sovereign AI infrastructure that further reduces its dependence on external IP. The liquidation of the Arm stake was the final administrative task before this next phase. Watch the 1.4 trillion dollar market cap level for Nvidia. If it holds, the transition to a fully vertically integrated AI powerhouse is complete.
