ARM (NASDAQ:ARM) Shares Gap Down - Should You Sell?

Key Points

• Shares gapped down — ARM opened at $126.38 vs a prior close of $130.89 (about a 3.7% drop) and last traded near $126 on ~2.22M shares, trading below its 50‑day ($152.35) and 200‑day ($147.55) moving averages.
• Analyst views are mixed but lean positive — the MarketBeat consensus is a "Moderate Buy" with an average target of $177.80 and many Buy ratings, although Goldman Sachs downgraded to a Sell with a $120 target.
• Fundamentals remain strong — ARM beat quarterly estimates (EPS $0.39 vs $0.33; revenue $1.14B, up 34.5%) and set Q3 2026 guidance of $0.37–$0.45 EPS, but the stock trades at a high P/E (~161), implying rich valuation risk.

ARM Holdings PLC Sponsored ADR (NASDAQ:ARM - Get Free Report)'s share price gapped down before the market opened on Monday . The stock had previously closed at $130.89, but opened at $126.38. ARM shares last traded at $126.0280, with a volume of 2,218,833 shares changing hands.

Analyst Upgrades and Downgrades

Several research analysts recently issued reports on ARM shares. Loop Capital increased their price target on shares of ARM from $155.00 to $180.00 and gave the stock a "buy" rating in a research note on Wednesday, November 12th. Morgan Stanley cut their target price on ARM from $180.00 to $171.00 and set an "overweight" rating on the stock in a research note on Thursday, October 9th. Cowen reissued a "buy" rating on shares of ARM in a research report on Thursday, November 6th. JPMorgan Chase & Co. increased their price target on ARM from $175.00 to $180.00 and gave the company an "overweight" rating in a report on Thursday, November 6th. Finally, The Goldman Sachs Group cut shares of ARM from a "neutral" rating to a "sell" rating and reduced their target price for the company from $160.00 to $120.00 in a report on Monday. One investment analyst has rated the stock with a Strong Buy rating, eighteen have assigned a Buy rating, seven have issued a Hold rating and one has given a Sell rating to the company. According to data from MarketBeat.com, ARM presently has a consensus rating of "Moderate Buy" and an average target price of $177.80.

ARM Stock Down 3.7%

The company's 50 day simple moving average is $152.35 and its 200-day simple moving average is $147.55. The firm has a market cap of $133.15 billion, a P/E ratio of 161.41, a P/E/G ratio of 7.84 and a beta of 4.24.

ARM (NASDAQ:ARM - Get Free Report) last announced its quarterly earnings data on Wednesday, November 5th. The company reported $0.39 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.33 by $0.06. ARM had a return on equity of 15.03% and a net margin of 18.81%.The company had revenue of $1.14 billion for the quarter, compared to analysts' expectations of $1.06 billion. During the same quarter in the prior year, the firm earned $0.30 earnings per share. ARM's revenue was up 34.5% compared to the same quarter last year. ARM has set its Q3 2026 guidance at 0.370-0.450 EPS. Equities research analysts predict that ARM Holdings PLC Sponsored ADR will post 0.9 EPS for the current year.

Institutional Trading of ARM

Several large investors have recently added to or reduced their stakes in ARM. Schroder Investment Management Group grew its position in shares of ARM by 41.7% during the 2nd quarter. Schroder Investment Management Group now owns 4,745,957 shares of the company's stock valued at $767,611,000 after acquiring an additional 1,396,684 shares during the period. Sustainable Growth Advisers LP increased its stake in shares of ARM by 116.8% during the second quarter. Sustainable Growth Advisers LP now owns 3,457,220 shares of the company's stock worth $559,171,000 after purchasing an additional 1,862,626 shares in the last quarter. Bank of America Corp DE increased its stake in ARM by 22.1% during the 3rd quarter. Bank of America Corp DE now owns 1,802,973 shares of the company's stock worth $255,103,000 after buying an additional 326,230 shares in the last quarter. Invesco Ltd. lifted its position in shares of ARM by 28.2% in the third quarter. Invesco Ltd. now owns 1,772,123 shares of the company's stock valued at $250,738,000 after acquiring an additional 390,217 shares in the last quarter. Finally, Capital Research Global Investors acquired a new stake in ARM in the 3rd quarter valued at about $243,098,000. Hedge funds and other institutional investors own 7.53% of the company's stock.

About ARM

Arm Holdings Plc engages in the licensing, marketing, research, and development of microprocessors, systems IP, graphics processing units, physical IP and associated systems IP, software, and tools. It operates through the following geographical segments: United Kingdom, United States, and Other Countries.

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