ARM Holdings has faced mixed sentiment and valuation scrutiny in 2025, with shares slipping nearly 15% over the past month. Earnings downgrades for fiscal 2026 have tilted sentiment bearish, and the company now trades with a high P/E ratio above 138, raising concerns about sustainability and competitiveness in the chip sector.

Despite ARM’s dominance in mobile chip design and AI data centers, analysts are cautious due to increased R&D spend, competitive threats, and potential partnership fallout. While ARM boasts strong gross margins and a healthy cash position, risks outweigh potential upside in the near term, making the stock a tricky bet for investors looking for semiconductor exposure.

For investors seeking alternatives, NVIDIA and Qualcomm offer better value with clearer financial traction. NVIDIA dominates the AI accelerator space with strong revenue and earnings growth, while Qualcomm’s diversified chip portfolio and solid royalty business position them for steady expansion. Both companies have demonstrated the ability to monetize their innovations effectively, making them compelling options in the semiconductor sector.

Read more at Nasdaq: Arm Holdings Faces Market Scrutiny Over Steep Valuation