ARM Should I Buy
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Arm Holdings PLC is not a strong buy for a beginner investor with a long-term strategy at this time. While the company has shown revenue growth, there are concerns about declining net income, insider trading trends, and technical indicators pointing to bearish momentum. The lack of strong trading signals and mixed analyst sentiment further support a hold recommendation.
The technical indicators suggest a bearish trend. The MACD is negatively expanding, RSI is neutral at 36.289, and moving averages are bearish (SMA_200 > SMA_20 > SMA_5). The stock is trading below the pivot level of 125.439, with key support at 118.616 and resistance at 132.262.
Arm's Q3 revenue increased by 26% YoY, surpassing analyst expectations. The company anticipates strong growth in its data center business, which aligns with the rising importance of CPUs in AI workloads.
Nvidia's complete sale of over 1 million shares in Arm Holdings indicates potential concerns about high valuations. Additionally, Malaysia's anti-corruption investigation into a $279 million deal with Arm Holdings could impact sentiment. Net income and EPS have declined YoY, and there is no recent congress trading data to provide additional confidence.
In Q3 2026, Arm's revenue increased by 26.35% YoY to $1.24 billion. However, net income dropped by 11.51% YoY to $223 million, and EPS fell by 12.50% YoY to $0.21. Gross margin slightly improved to 97.58%.
Analyst sentiment is mixed. While some analysts have raised price targets citing growth potential in AI and data centers, others have lowered targets due to concerns about operating expenses and SoftBank's influence. Price targets range from $115 to $170, with a mix of Neutral, Buy, and Overweight ratings.
