Why Arm Holdings Stock Was Tumbling Today
Why Arm Holdings Stock Was Tumbling Today
Jeremy Bowman, The Motley FoolMon, April 27, 2026 at 3:56 PM UTC
0
Key Points -
Agentic AI is starting to drive a boom in CPUs
Arm is designing its own chip for the first time.
The valuation is expensive, but the valuation has a lot of growth potential.
10 stocks we like better than Arm Holdings ›
Shares of Arm Holdings (NASDAQ: ARM) were pulling back one session after surging in sympathy with a strong earnings report from Intel.
CPU stocks, including Arm, have been soaring in recent weeks as it becomes clear that Agentic AI is driving outsize demand for CPUs. There was no company-specific news out on Arm today, but the stock seemed down on profit-taking, and as investors seemed to think the rally had gotten overheated following Friday's surge.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
As of 10:49 a.m. ET, Arm stock was down 8.9%, following a jump of 14.8% on Friday.
An AI chip surrounded by circuits.
Image source: Getty Images.
Is Arm overbought?
Even with today's drop, Arm is still up more than 50% from its low point on April 7, less than three weeks ago.
The stock surged on March 25 when it announced that it was making its own chip for the first time, a departure from its historical licensing model. However, it quickly gave back those gains in the broader market malaise around the war in Iran.
After rallying over the last three weeks on cooling tensions in Iran and a general surge in AI stocks, Arm jumped on Intel's earnings report as the legacy chipmaker easily beat expectations in its first-quarter earnings report and gave better-than-expected guidance. Intel is a direct competitor with Arm in the CPU market, though Arm's power-efficient architecture is considered an advantage in segments like smartphones.
Advertisement
Intel CEO Lip-Bu Tan specifically called out the increasing need for CPUs as models shift to agentic functions, which bodes well for peers like Arm. AMD, another top CPU maker, also pulled back today after jumping on Friday.
What's next for Arm?
As the stock has soared, Arm's valuation has gotten stretched, and it now trades at a price-to-earnings ratio of 130 based on adjusted earnings per share.
The company's plan to launch its own silicon should change its growth trajectory, and the company is calling for $25 billion in annual revenue by 2031, though favorable supply/demand dynamics could push that higher.
We'll learn about Arm's prospects when it reports earnings next Wednesday, but the tailwinds in the CPU market are certainly good news, despite today's pullback.
Should you buy stock in Arm Holdings right now?
Before you buy stock in Arm Holdings, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Arm Holdings wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $498,522!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,276,807!*
Now, it’s worth noting Stock Advisor’s total average return is 983% — a market-crushing outperformance compared to 200% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of April 27, 2026.
Jeremy Bowman has positions in Advanced Micro Devices and Arm Holdings. The Motley Fool has positions in and recommends Advanced Micro Devices and Intel. The Motley Fool has a disclosure policy.
Source: “AOL Money”
