ARM Should I Buy
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Arm Holdings PLC is not an ideal buy at the moment for a beginner, long-term investor with $50,000-$100,000 available for investment. Despite positive revenue growth and a strong gross margin, the declining net income and EPS, coupled with mixed analyst ratings and a lack of strong trading signals, suggest a wait-and-see approach. Additionally, the technical indicators and options data do not strongly support an immediate bullish sentiment.
The MACD is positive at 1.836, indicating bullish momentum, but it is contracting. RSI is at 71.79, which is neutral, showing no clear overbought or oversold conditions. Moving averages are converging, signaling indecision. Key support is at 118.272, and resistance is at 130.068. The stock is trading close to resistance, limiting upside potential in the short term.
Arm reported a 26% YoY revenue increase in Q3 2026, exceeding analyst expectations. Gross margin improved slightly to 97.58%. Analysts see potential growth in AI and data center segments, with some viewing the current price as an entry point.
Net income dropped by 11.51% YoY, and EPS fell by 12.50% YoY, indicating profitability challenges. Nvidia's sale of its stake in Arm may raise concerns about long-term strategic partnerships. Analysts have broadly lowered price targets, reflecting tempered expectations.
In Q3 2026, revenue increased to $1.24 billion, up 26.35% YoY, but net income dropped to $223 million, down 11.51% YoY. EPS decreased to 0.21, down 12.50% YoY. Gross margin improved slightly to 97.58%, up 0.44% YoY. While revenue growth is strong, declining profitability metrics are a concern.
Analyst ratings are mixed, with price targets ranging from $115 to $170. Some analysts highlight strong growth potential in AI and data centers, while others express concerns about operating expenses and SoftBank's influence. Recent upgrades and downgrades reflect a cautious but optimistic outlook.
