Arm Holdings (NasdaqGS:ARM): Reassessing Valuation After China EUV Breakthrough Fears and Analyst Downgrades

Arm Holdings (ARM) is back in the spotlight after reports that China has built a prototype extreme ultraviolet lithography machine, a potential long term competitive threat that has rattled sentiment across the AI chip ecosystem.

See our latest analysis for Arm Holdings.

Those China headlines and recent analyst downgrades have landed on a stock that was already cooling off, with the 30 day share price return of minus 16.76 percent and year to date share price return of minus 11.05 percent signalling that momentum has clearly faded despite upbeat long term growth narratives.

If this kind of volatility has you thinking about diversification across the chip stack, it could be a good moment to explore high growth tech and AI stocks as potential next wave beneficiaries.

With shares down double digits over the past year even as revenue and profits grow briskly, investors are left with a familiar puzzle: is Arm now trading at a discount to its future potential, or has the market already priced in years of AI driven expansion?

Most Popular Narrative Narrative: 62.9% Overvalued

Compared to Arm Holdings last close at $114.03, the narrative from jaikhom pins fair value far lower, framing today price as a speculative premium.

Based on a forward earnings framework anchored to the 10 year U.S. Treasury yield, the stock’s intrinsic fair value is estimated at $70 per share. Applying a prudent 20% discount to reflect interest rate risk and macro uncertainty yields a conservative, risk adjusted target of $56.

Read the complete narrative.

Want to see why a business growing this fast still screens as richly priced? The narrative leans on earnings power, profit margins, and a future multiple that would turn heads. Curious how those levers combine into that lower fair value band? The full story breaks down the math behind that call.

Result: Fair Value of $70 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, several factors could upend this overvaluation case, including a sharp AI demand slowdown or faster-than-expected competition eroding Arm pricing power.

Find out about the key risks to this Arm Holdings narrative.

Build Your Own Arm Holdings Narrative

If you see things differently or want to dig into the numbers yourself, you can build a personalised view in under three minutes: Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Arm Holdings.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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