In an unprecedented surge in options trading, Arm Holdings has experienced a remarkable increase in its stock price after forecasting better-than-expected quarterly results. The technology company, which specializes in designing chips for artificial intelligence (AI) features, has caught the attention of investors seeking the "next NVIDIA" frenzy in AI stocks.

Arm Holdings' shares have skyrocketed, rising by an astounding 80% since Wednesday of last week. This surge in stock price has sparked a surge in options trading, with volume increasing significantly to about 490,000 contracts per day over the past three sessions. In fact, this is more than 10 times the average daily trading volume in the month leading up to the earnings report.

The rising volume of options has been a clear indicator that investors are eagerly searching for the next big AI stock. The bullish options activity has likely played a role in driving the stock price even higher. Popular chip heavyweight Nvidia, which has been at the forefront of the AI frenzy, has seen a remarkable increase by roughly 220% over the past year, making it the best performing stock in the S&P 500.

On Monday, an astonishing 600,000 Arm contracts were traded by 2:15 p.m. (1915 GMT), and it is projected that the day's volume will surpass a record-breaking 816,000 contracts. With Arm shares climbing by 20% to reach $137.72 on Monday, the most actively traded Arm contracts were call options on the shares rising above $185 by Friday.

The recent surge in Arm's share price has resulted in significant gains for bullish options bets. For instance, a trader who invested roughly $12.2 million in 5,000 ARM January 2026 calls on Feb. 7 is now seeing the value of those contracts at approximately $42 million, based on their last trading price on Monday. Interestingly, the trader seems to be holding on to these call options, hinting at continued optimism for the stock.

While Arm's technology is not directly involved in AI work, it has become the chip of choice for companies like Nvidia, who use it in conjunction with their AI-specific chips. This demand has only added to the growing interest in Arm Holdings and its potential for future growth.

As the search for the "next NVIDIA" in the AI industry intensifies, Arm Holdings has emerged as a significant contender. With its shares soaring, options trading reaching record-breaking numbers, and bullish bets reaping significant gains, the technology company continues to captivate investors and industry experts alike.