Arm Holdings Stock Drops 40%, AI Chip Growth Potential Emerges
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Source: NASDAQ.COM
- Stock Decline: Arm Holdings' stock has fallen 40% since hitting a 52-week high in October 2025, despite strong revenue and earnings growth, presenting investors with a relatively attractive forward earnings multiple.
- AI Chip Architecture Growth: The company's AI-focused architecture, Armv9, saw its royalty revenue double year-over-year in Q2 FY2026, contributing to an impressive 34% overall revenue growth, indicating strong potential in the data center market.
- Market Share Increase: Arm's share of the cloud computing market has risen by 11 percentage points over the past three years to 20%, demonstrating the company's growing competitiveness in the rapidly expanding networking and cloud computing sectors.
- Analyst Optimism: With a median price target of $180 from 41 analysts, representing a potential 67% upside from current levels, the market reflects a positive outlook on Arm's future growth trajectory.
Analyst Views on ARM
Wall Street analysts forecast ARM stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for ARM is 186.54 USD with a low forecast of 150.00 USD and a high forecast of 215.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
17 Analyst Rating
13 Buy
4 Hold
0 Sell
Strong Buy
Current: 105.110
Low
150.00
Averages
186.54
High
215.00
Current: 105.110
Low
150.00
Averages
186.54
High
215.00
About ARM
Arm Holdings plc is engaged in operating a global computing platform. It architects, develops, and licenses high-performance and energy-efficient Arm compute platforms. The Company’s principal operations and activities are the licensing, marketing, research and development of central processing unit (CPU) design intellectual property (IP), graphics processors, system IP, market optimized platform IP, and associated software, tools and other related services. Its complementary products include GPU and NPU accelerators, interconnect, and others. Its primary product offerings are CPU products that address diverse performance, power, and cost requirements. It offers a family of GPU and NPU products providing efficient computing acceleration and an optimal visual experience across a wide range of devices. Its CPU, GPU, and System IP products integrated into a foundational compute platform optimized for a specific end market.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
