Shares in Arm have soared by more than 50% after raising profit and revenue forecasts amid red-hot demand for artificial intelligence technology, valuing the UK-based tech company at double the market capitalisation when it floated in September.

Shares in the world’s biggest supplier of design elements for processing chips used in products from smartphones to games consoles opened up 58% on the Nasdaq in the US on Thursday.

Within hours an investor frenzy pushed Arm’s share price over $122, valuing the business at about $120bn.

That is more than double the $51 a share offered when the Cambridge-headquartered business’s parent company, Japan’s SoftBank, floated the business in New York last September, snubbing the UK.

Rene Haas, Arm’s chief executive, said on Wednesday that the company was benefiting from the “profound opportunity” brought by the demand from tech firms to release products and apps underpinned by AI.

Arm – still controlled by SoftBank, which owns 90% of its shares – beat analyst expectations to report revenues up 14% year on year to $824m in the final calendar quarter.

Increasing demand from companies wanting to license its designs to run AI, and a recovery in sales of smartphones, prompted Arm to raise its full-year revenue and profit guidance.

Arm’s first quarterly report, published in November, was much less well received by investors after the company revealed a $500m payout in remuneration costs after the New York listing, which required it to settle outstanding shares previously granted to employees.

SoftBank’s decision to list in the US, despite intense lobbying by the UK government, dealt a blow to Rishi Sunak’s ambitions to make London the first choice for tech company flotations.

Arm previously had a dual listing on both sides of the Atlantic before it was acquired by SoftBank for £24.6bn in 2016 and had been a member of the FTSE for 18 years.

The chip designer, which promised to keep its headquarters, operations and “material intellectual property” in the UK, indicated it would consider a secondary London listing “in due course”.

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