Arm Holdings stock drops 16% in 3 months, trading below moving average due to weak economic data.

From Nasdaq: 2024-09-11 13:37:00

Arm Holdings plc’s stock has dropped 15.5% in the past three months but gained 69.3% year to date. Trading at $127.22, it’s 33% below its 52-week high and below the 50-day moving average. Weak economic data contributes to the recent decline, with fears of recession playing a role.

Arm leverages AI for chip design used in smartphones and data centers. Its v9 architecture and processor platforms attract industry players. The company forecasts a 20% growth in royalty revenues for Q2, expected due to higher adoption of v9 designs, especially in the smartphone market.

Although Arm faces challenges in IoT and networking equipment markets, its top and bottom-line prospects remain healthy. Analysts estimate earnings to increase by 22.8% for fiscal 2025 and 32.3% for fiscal 2026, with strong upward revisions reflecting confidence in the company’s financial performance.

Arm’s stock, despite recent decline, is still expensive at 71.1 times forward earnings. Investors may want to wait for a better entry point. The company’s strong foothold in the AI hardware market suggests long-term potential, but timing is key. Arm currently holds a Zacks Rank #3 (Hold), with room for further price drops anticipated.



Read more at Nasdaq: Arm Holdings Stock Drops 16% in 3 Months: Is Now the Time to Buy?