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+1.4% 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+0.5% and Google's parent company Alphabet $GOOGL-0.1% 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.

I was very interested in this company, but somehow I forgot about it, so thank you for reminding me. I'll have to take a quick look at the company and I'll definitely be following the IPO at least a little :)

You're welcome, IPO should be 13.9

Cool, thanks for the info :D

I'm looking forward to this IPO, I'll also be watching and not joining right away, but we'll see, there are a lot of big companies involved so it could be interesting.

We will have the same course :)

Mainly sit on your hands because it will be tempting to get in on it, I think quite a few people here will be in anticipation, there is really a lot of news, interest etc around this and what we will, once something is promoted a lot it grows even though the real price may not match.😊

I got burned last time on the $COIN-4.6% IPO , so I'll be watching this one from a bit of a distance... but I'm curious :)

I can understand that, it makes you wary.

Mostly educated... :-D

The valuation seems over the top to me, but I'll definitely be watching the IPO, it's a pretty big deal.

He may or may not, I'm very curious about the first day.

With all these big companies involved, it could be really interesting. The development of the first day will definitely be something to watch.

Primarily because of all these companies, I will definitely be watching the IPO.

Me too. When is that?