9 Trending AI News Updates on Wall Street’s Radar

2. Arm Holdings plc (NASDAQ:ARM)

Number of Hedge Fund Holders: 38

Arm Holdings plc (NASDAQ:ARM) designs and licenses semiconductor technologies, including microprocessors and system IP products, serving markets like automotive, computing, and IoT.

On February 6, Bernstein maintained its Underperform rating on Arm with a price target of $100, due to concerns about cyclical challenges. Arm’s Q3FY25 revenues reached a record $983 million, exceeding expectations, driven by strong licensing and royalties. However, v9 adoption has stalled at 25% of royalties, missing earlier growth projections. While Q4 guidance aligns with expectations, full-year revenue was only slightly revised upward. Bernstein highlighted the company’s increasing reliance on related parties revenue, especially from China, and remains cautious on short-term performance, despite long-term growth potential in AI and related sectors. The firm said:

“There was significant commentary on AI traction, expectations for Compute Subsystems (CSS), and the broader ecosystem, indicating continued long-term potential. Arm emphasized its focus on building capacity to address these opportunities, suggesting a continued commitment to R&D spending. However, in the near term, even with the slight uptick in full-year guidance now slightly ahead of expectations, we believe the response from investors may be muted given current valuation levels. We remain cautious on cyclical headwinds for now, though we acknowledge the long-term story continues to develop positively.”