ARM (NASDAQ:ARM) Stock Price Down 3.3% - What's Next?

Key Points

• ARM shares fell 3.3% to $266.28 in mid-day trading, with volume 45% below the average session level.
• The company’s AI opportunity remains strong, supported by a collaboration with Lattice Semiconductor for AI servers and broad adoption of Arm-based chips; recent earnings also exceeded expectations, with revenue up 22.4% year over year.
• Valuation and risk remain significant concerns: ARM trades at roughly 43.5 times forward sales after a 143% year-to-date rally, while sector-wide AI sentiment and an ongoing licensing dispute with Qualcomm could pressure the stock. Analysts maintain a “Moderate Buy” consensus with a $303.32 target price.

Arm Holdings PLC Sponsored ADR (NASDAQ:ARM - Get Free Report) shares dropped 3.3% during mid-day trading on Friday. The stock traded as low as $265.60 and last traded at $266.28. 4,230,559 shares changed hands during mid-day trading, a decline of 45% from the average session volume of 7,645,470 shares. The stock had previously closed at $275.29.

Trending Headlines about ARM

Here are the key news stories impacting ARM this week:

• Positive Sentiment: AI-server collaboration: Lattice Semiconductor is working with Arm to integrate FPGA-based control technology into AI servers. The partnership could support demand for Arm-based infrastructure as data-center operators expand AI capacity. Lattice Collaborates with Arm to Integrate FPGA-based Control for AI Servers
• Positive Sentiment: Broad AI exposure: Coverage says major AI platforms use Arm-based chips and that demand for the company’s flagship CPU has exceeded management’s projections. This reinforces the growth case tied to AI data-center construction. Wall Street May Be Underestimating Arm’s AI Opportunity
• Neutral Sentiment: Investor debate after a major rally: Arm’s approximately 143% year-to-date gain reflects optimism about AI and data centers, prompting investors to weigh taking profits against holding for additional growth. The debate underscores both strong momentum and elevated expectations. Arm Stock Is Up 143% This Year: Take Profits, or Hold On for the Ride?
• Negative Sentiment: Valuation concerns: Although the stock rebounded about 11.5% over the past month, analysts point to a forward price-to-sales multiple of roughly 43.5 times. That premium leaves ARM vulnerable to profit-taking or a slowdown in AI spending. ARM Stock Rebounds 11.5% in a Month: Is it a Buy Right Now?
• Negative Sentiment: OpenAI-related chip pressure: An OpenAI revenue report contributed to a selloff across chip stocks, and ARM fell with the sector. The episode shows that sentiment toward AI spending can weigh on ARM even when its long-term business exposure remains attractive. Arm Holdings Stock Fell 6% in a Day as an OpenAI Revenue Report Hit Chip Stocks
• Negative Sentiment: Qualcomm licensing trial: Arm and Qualcomm are in federal court over licensing terms and potentially billions of dollars in royalty payments. An unfavorable outcome could affect Arm’s royalty revenue or licensing structure, while the dispute adds uncertainty to its relationship with a major customer. Arm Holdings Heads To Trial Over Billions In Royalty Payments

Analyst Ratings Changes

Several analysts recently commented on the stock. Raymond James Financial reissued an "outperform" rating and set a $166.00 target price on shares of ARM in a research note on Tuesday, August 25th. UBS Group dropped their price target on ARM from $360.00 to $320.00 and set a "buy" rating on the stock in a report on Thursday, July 30th. Morgan Stanley lifted their target price on ARM from $202.00 to $212.00 and gave the stock an "equal weight" rating in a report on Thursday, July 30th. Guggenheim reaffirmed a "buy" rating and set a $255.00 target price on shares of ARM in a research report on Thursday, July 30th. Finally, Royal Bank Of Canada reduced their target price on ARM from $475.00 to $340.00 and set an "outperform" rating for the company in a report on Thursday, July 30th. One research analyst has rated the stock with a Strong Buy rating, eighteen have assigned a Buy rating, seven have given a Hold rating and one has given a Sell rating to the stock. Based on data from MarketBeat, the stock has a consensus rating of "Moderate Buy" and a consensus target price of $303.32.

ARM Stock Performance

The stock has a market cap of $284.41 billion, a price-to-earnings ratio of 274.52, a price-to-earnings-growth ratio of 8.73 and a beta of 3.78. The business's 50 day moving average is $269.58 and its 200 day moving average is $265.87.

ARM (NASDAQ:ARM - Get Free Report) last announced its earnings results on Thursday, July 30th. The company reported $0.45 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.40 by $0.05. The company had revenue of $1.29 billion for the quarter, compared to the consensus estimate of $1.26 billion. ARM had a net margin of 20.25% and a return on equity of 12.24%. The company's revenue was up 22.4% on a year-over-year basis. During the same period in the previous year, the business earned $0.35 EPS. Research analysts expect that Arm Holdings PLC Sponsored ADR will post 1.15 earnings per share for the current year.

Insider Transactions at ARM

In other ARM news, CFO Jason Child sold 10,400 shares of the firm's stock in a transaction dated Monday, September 21st. The stock was sold at an average price of $300.00, for a total transaction of $3,120,000.00. Following the completion of the sale, the chief financial officer directly owned 153,442 shares in the company, valued at approximately $46,032,600. This trade represents a 6.35% decrease in their position. The sale was disclosed in a legal filing with the SEC, which is available through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan.

Hedge Funds Weigh In On ARM

A number of large investors have recently made changes to their positions in ARM. Hyperion Asset Management Ltd grew its position in ARM by 28.0% during the fourth quarter. Hyperion Asset Management Ltd now owns 1,836,185 shares of the company's stock valued at $200,713,000 after purchasing an additional 401,594 shares in the last quarter. Franklin Resources Inc. boosted its stake in shares of ARM by 0.7% during the 4th quarter. Franklin Resources Inc. now owns 1,461,410 shares of the company's stock valued at $159,747,000 after buying an additional 10,385 shares during the period. Employees Provident Fund Board purchased a new position in shares of ARM during the 4th quarter valued at $120,241,000. SG Americas Securities LLC increased its stake in shares of ARM by 265.6% in the first quarter. SG Americas Securities LLC now owns 971,067 shares of the company's stock worth $146,903,000 after acquiring an additional 705,459 shares during the last quarter. Finally, Arrowstreet Capital Limited Partnership raised its holdings in shares of ARM by 1,203.5% during the first quarter. Arrowstreet Capital Limited Partnership now owns 945,152 shares of the company's stock worth $142,983,000 after acquiring an additional 872,644 shares in the last quarter. Institutional investors and hedge funds own 7.53% of the company's stock.

About ARM

Arm Holdings plc NASDAQ: ARM is a semiconductor and software design company that develops intellectual property used to create energy-efficient computing products. Arm does not generally manufacture chips; instead, it licenses processor architectures, CPU cores, graphics technologies and related system IP to semiconductor companies and original equipment manufacturers, which incorporate them into their own products.

The company's offerings include the Cortex family of CPUs for mobile, consumer, automotive and embedded applications; Neoverse platforms for cloud and data-center infrastructure; Mali graphics processing units; and Ethos neural processing units designed for artificial intelligence and machine-learning workloads.

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