ARM (NASDAQ:ARM) Stock Price Down 6.9% - Time to Sell?

Key Points

• ARM shares fell 6.9% to $227.80, amid a broader semiconductor sell-off following the Qualcomm licensing dispute and concerns about profit-taking after the stock’s more than 120% year-to-date gain.
• Arm’s fundamentals remain strong: annualized contract value rose 13% to $1.73 billion, while the latest quarter beat revenue and earnings expectations. Microsoft’s native Python support for Windows on Arm could also support broader PC adoption.
• Valuation remains a key risk, with ARM trading at roughly 235 times earnings. Despite this, analysts maintain a “Moderate Buy” consensus and an average price target of $303.32, well above the recent share price.

Arm Holdings PLC Sponsored ADR (NASDAQ:ARM - Get Free Report) fell 6.9% during trading on Friday. The stock traded as low as $226.65 and last traded at $227.80. Approximately 4,738,811 shares changed hands during mid-day trading, a decline of 38% from the average session volume of 7,595,997 shares. The stock had previously closed at $244.79.

Key Stories Impacting ARM

Here are the key news stories impacting ARM this week:

• Positive Sentiment: Arm’s annualized contract value increased 13% to $1.73 billion, indicating continued licensing momentum ahead of its fiscal second-quarter results. This provides evidence that demand for Arm’s chip architecture remains healthy. Can ARM's 13% Contract Value Growth Sustain Momentum in Q2?
• Positive Sentiment: Microsoft is adding native Python support to Windows on Arm PCs, potentially improving software compatibility and adoption of Arm-based computers beyond smartphones. Microsoft Brings Native Python Support to Windows on Arm PCs
• Neutral Sentiment: A Delaware jury found that Qualcomm breached Arm’s licensing agreement but awarded Qualcomm only $2 in damages. The limited verdict leaves the broader dispute unresolved, with another court proceeding or trial likely regarding Qualcomm’s use of Arm technology in custom chips. Qualcomm awarded $2 in battle against Arm, but another court date is likely
• Negative Sentiment: The Qualcomm litigation is adding uncertainty to Arm’s licensing relationships and helped intensify selling across chip stocks, including Arm, AMD and Taiwan Semiconductor. Arm and AMD Fall as Qualcomm Verdict Adds to Chip Selloff
• Negative Sentiment: Investors are also questioning ARM’s valuation after its more-than-120% year-to-date advance. With a very high earnings multiple, the stock is vulnerable to profit-taking and disappointing guidance even as Arm expands into AI data centers. The Next AI Stock Wall Street Is Starting to Pay Attention To

Analysts Set New Price Targets

ARM has been the topic of a number of recent analyst reports. Benchmark assumed coverage on ARM in a report on Thursday, July 16th. They set a "hold" rating on the stock. UBS Group decreased their price objective on ARM from $360.00 to $320.00 and set a "buy" rating for the company in a report on Thursday, July 30th. Royal Bank Of Canada lowered their target price on ARM from $475.00 to $340.00 and set an "outperform" rating on the stock in a research report on Thursday, July 30th. Susquehanna lifted their target price on ARM from $300.00 to $320.00 and gave the company a "positive" rating in a research note on Tuesday, July 21st. Finally, Piper Sandler initiated coverage on shares of ARM in a research note on Wednesday, September 9th. They set an "overweight" rating and a $320.00 target price on the stock. One research 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's stock. According to data from MarketBeat, the stock presently has a consensus rating of "Moderate Buy" and an average target price of $303.32.

ARM Stock Down 6.9%

The company has a 50 day moving average of $268.36 and a two-hundred day moving average of $269.61. The firm has a market cap of $243.31 billion, a P/E ratio of 234.85, a PEG ratio of 7.06 and a beta of 3.78.

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

Insider Activity at ARM

In related news, CFO Jason Child sold 10,400 shares of the business's stock in a transaction that occurred on Monday, September 21st. The shares were sold at an average price of $300.00, for a total value of $3,120,000.00. Following the sale, the chief financial officer directly owned 153,442 shares in the company, valued at $46,032,600. The trade was a 6.35% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan.

Institutional Trading of ARM

A number of large investors have recently added to or reduced their stakes in the business. Hyperion Asset Management Ltd increased its holdings in shares of ARM by 28.0% in the fourth quarter. Hyperion Asset Management Ltd now owns 1,836,185 shares of the company's stock valued at $200,713,000 after buying an additional 401,594 shares in the last quarter. SG Americas Securities LLC grew its holdings in shares of ARM by 265.6% in the 1st 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. Arrowstreet Capital Limited Partnership grew its holdings in shares of ARM by 1,203.5% in the 1st 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 during the last quarter. Employees Provident Fund Board acquired a new stake in shares of ARM during the fourth quarter worth $120,241,000. Finally, Janus Henderson Group PLC acquired a new stake in shares of ARM during the first quarter worth $116,112,000. 7.53% of the stock is currently owned by institutional investors.

ARM Company Profile

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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