Key Takeaways
- Arm stock fell 19.8% in the past month (through Tuesday’s close). It gave back a 17% jump on Sept. 21 tied to Meta’s Muse AI agent, while the Nasdaq 100 slipped 0.5%.
- Most of the fall came on days the whole chip sector sold off, and Arm hasn’t changed its guidance, so the drop looks like a better entry point than a month ago.
- A judge still has to rule whether Qualcomm can stop paying Arm royalties for five years. Qualcomm’s payments equal about half of Arm’s operating income.
- Arm reports its fiscal second quarter on Nov. 4 against revenue guidance of $1.38 billion, with the stock about 32% below the $291 mean analyst target.
Arm Holdings (ARM) stock is down 19.8% in the past month (through Tuesday’s close), while the Nasdaq 100 slipped just 0.5%. It’s still up 102% in 2026, but it now sits 51% below its June high.
Most of the damage came on days the whole chip sector sold off. But two of the month’s worries are Arm’s own, and the bigger one hasn’t been settled yet.
The Muse rally didn’t last
On Sept. 21, Arm jumped 17% on hopes that Muse, the AI agent from Meta Platforms (META), would lift demand for CPUs, as AI stocks rebounded.
It didn’t hold. On Sept. 24, the stock fell 7.9% after reports that SoftBank’s Arm stake backs a $25 billion loan facility. Then on Sept. 28, it sank 8.7% as fears about AI safety after a breach hit chip stocks.
By Tuesday, Arm had given back that whole jump and then some, closing about 32% below where it ended Sept. 21.
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October brought the jury, and more chip selling
Arm fell 6.5% on Oct. 8 as an OpenAI revenue report hit chip stocks. It fell 6.9% on Oct. 16 in a selloff over how AI gets financed, and another 4% on Tuesday after the South Korean neocloud Elice had a weak market debut.
Qualcomm (QCOM) took its lawsuit against Arm to a jury in Delaware on Oct. 5. On Oct. 13, the jury found Arm breached its license by holding back software patches and tools. It also found that Arm interfered with Qualcomm’s dealings with Meta.
The damages? $1 on each of those two claims.
The stock closed about flat that day, then fell 6.8% on Oct. 14.
The judge matters more than the jury
US District Judge Maryellen Noreika still has to rule on whether the breach lets Qualcomm stop paying Arm royalties for five years. Arm argues that clause is unenforceable.
Arm’s annual filing says Qualcomm made up 9% of its $4.92 billion revenue in fiscal 2026 (the year ended March 2026), or about $443 million. Those payments, license fees included, equal about half of Arm’s $908 million operating income for the year.
If Noreika lets the clause stand, Arm could go five years without royalties from a customer that size. If she strikes it, Qualcomm is left seeking ordinary damages, and a jury just put those at $2.
What to watch on Nov. 4
Arm reports its fiscal second quarter after the close on Wednesday, Nov. 4. It guided to $1.38 billion in revenue, plus or minus $50 million. In the first quarter, revenue rose 22% to $1.29 billion.
On the July 29 call, CFO Jason Child said royalty growth this year will probably land closer to the high teens than the roughly 20% Arm had expected. On the same call, CEO Rene Haas put demand for the new Arm AGI CPU above $2 billion.
Analysts still expect fiscal 2027 revenue to climb about 23% to $6.06 billion.
Apart from the Qualcomm clause, nothing this month gives them a reason to cut those numbers.
Cheaper, but still not cheap
Arm traded at 95.6x forward earnings on Monday. That’s down from 201.8x at its June peak, but still above its three-year average of 84.7x.
Meanwhile, analysts’ mean price target rose from $156 a year ago to $291. That’s about 32% above Tuesday’s close.
My take: the month’s drop is mostly the chip trade’s mood. Arm hasn’t changed its guidance, and the jury put a $2 price on what Arm did wrong. I’d lean toward loading up at these prices, as long as Noreika doesn’t let the five-year clause stand.
Of course, her ruling is still to come. And at more than 90x forward earnings, Arm doesn’t have much room to disappoint on Nov. 4.
So what is Arm stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
