Arm Holdings plc (ARM) stock is trading nearly 3% higher Thursday in premarket trading as investors digest bullish comments from CEO Rene Haas on artificial intelligence demand and the company's growth outlook.

The broader market is also providing support. Nasdaq futures are up 1.08%, while S&P 500 futures have gained 0.84%.

AI Demand Runs Into Supply Constraints

Haas said demand for the company's technology has never been stronger. However, he warned that supply constraints could persist for years as artificial intelligence drives soaring computing needs.

“Demand is off the charts,” Haas told CNBC's Jim Cramer on Wednesday.

Haas said AI requires huge amounts of CPUs, GPUs and memory. Demand is rising across data centers, automotive, robotics and edge computing.

However, the industry may struggle to keep pace.

“The big constraint is going to be supply,” Haas said. He pointed to potential bottlenecks in wafers, substrates, testing equipment and memory.

As a result, Haas expects “complex supply chain issues” for the next several years.

He also said Arm's confidence in reaching $2 billion for its emerging chip business has continued to improve. The company first discussed visibility toward that level in May.

“I'm more confident today than I was on that July earnings call,” Haas said.

Data Centers Could Become Arm's Largest Business

Haas said customers are asking Arm to produce more chips and deliver them faster, rather than expressing concern about Arm competing with its licensees.

He also expects data centers to soon become Arm's largest business after years of double-digit growth.

Haas pointed to robotics and autonomous vehicles as another major opportunity. He said advanced robots and automobiles could each contain hundreds of CPUs.

“Every AI application is going to run through Arm in one shape or another,” Haas said.

Technical Analysis

Arm is attempting to stabilize after a volatile stretch. The stock is about 1.6% above its 20-day simple moving average of $247.24. However, it remains 4.5% below its 50-day SMA of $262.81.

The relative strength index stands at 45.28, placing Arm in neutral territory. That suggests momentum is recovering but has yet to turn decisively bullish.

The longer-term trend remains supported by a golden cross formed in April, when the 50-day SMA moved above the 200-day SMA. However, Arm remains below its 50-day and 100-day SMA of $282.98.

A move above the 50-day SMA could strengthen the recovery. Resistance sits near $267.50, while support is around $233.50.

Analyst Outlook

The stock trades at a price-to-earnings ratio of about 249, reflecting a premium valuation. Analysts have a consensus Buy rating and an average price forecast of $319.

Rosenblatt maintained a Buy rating while lowering its price forecast to $250 on July 31. UBS maintained Buy and lowered its forecast to $320 on July 30. Morgan Stanley maintained Equal-Weight and raised its forecast to $212 on July 30.

Momentum Rankings

Arm scores 91.57 for momentum on the market data scorecard, indicating strong relative price performance.

However, its value score is just 1.88. The combination highlights strong momentum alongside a premium valuation.

Top ETF Exposure

Investors can also gain exposure to Arm through exchange-traded funds that hold the stock.

The Renaissance IPO ETF (IPO) has a 7.50% weighting in Arm. The First Trust International Equity Opportunities ETF (FPXI) has a 3.96% weighting, while the VanEck Fabless Semiconductor ETF (SMHX) has a 3.76% weighting.

Because Arm has a meaningful weighting in these ETFs, fund inflows and outflows can also contribute to trading activity in the stock.

ARM Stock Price Action

Arm shares rose 2.91% to $251.09 in Thursday's premarket session, according to market data.