ARM HOLDINGS is gearing up for a spectacular initial public offering to test the market's interest in a major technology company. But its target valuation suggests it is resigned to not being the next Nvidia.

According to The Wall Street Journal, citing people familiar with the matter, British chipmaker Arm is seeking a valuation for its initial share offering on the Nasdaq stock exchange in the range of $50 billion to $55 billion.

Arm declined to comment when contacted by Barron's magazine.

The target value is lower than the $64 billion that was calculated as Arm's value after the recent stake sale involving its current owner SoftBank (ticker: 9984.Japan). SoftBank hopes to sell about 10% of all outstanding shares in the offering, The Journal reported.

Even so, it would be the biggest IPO of the year and an important indicator of investor interest in a large technology company going public at a time of high interest rates. The valuation still suggests that Arm is fairly optimistic.

Arm had revenue of $2.68 billion and net income of $524 million in its most recent fiscal year. This suggests that a sliding price-to-earnings multiple of between 95 and 105 times is expected.

That's less than the 117 times trailing price-to-earnings multiple that Nvidia's $NVDA-2.2% trades at . However, Arm is still aiming for a high premium over other chipmakers that are heavily dependent on the sluggish smartphone market. Qualcomm $QCOM, for example, trades at a 15 times P/E ratio.

The backwardation doesn't tell the whole story. Arm's technology powers the chips inside almost every smartphone, and it hopes that several of its partners will invest in its IPO as strategic investors. According to Reuters, Nvidia, Apple $AAPL+0.1% and Google's parent company Alphabet $GOOGL+0.7% are among the companies that have signed up to invest . That could boost the valuation.

But what makes sense as a strategic investment for Arm's customers may not make sense for individual investors. Arm's exposure to smartphones and the Chinese market has raised questions among analysts about its growth trajectory.

"Our experts are skeptical about the long-term sustainability of ARM's revenue growth and high margins. They expect annual revenue growth of 5% to 10% over the next five years, followed by a peak followed by a decline on an annual basis," Albie Amankona, an analyst at Third Bridge, wrote in a research note Monday.