Value
3.1/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 0.0 |
| Fwd P/E | 1.7 |
| PEG | 4.8 |
| Analyst target | 9.0 |
- ▸Forward P/E: 64.4x
- ▸PEG: 1.69
ARM · Why this verdict
Why Arm Holdings (ARM) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.7/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Arm is a high-quality, fast-growing semiconductor IP business with a wide moat and 9/9 Piotroski, but a 67.2x forward P/E, a 54% drawdown and weak momentum leave it a speculative holding despite 29.8% upside to the analyst target.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue is growing 22% year over year with earnings growth scoring a perfect 10, supporting the case for sustained expansion. Growth breakdown | Revenue growth stays above 15% over the next 12 months. | →Stable |
| CounterA growth rate of 22% may not justify a forward P/E of 67.2x if growth decelerates. | ||
Arm earns 20% margins with a wide economic moat, 128% FCF/net income conversion, a Rule of 40 score of 48 and a perfect 9/9 Piotroski F-Score. Quality breakdown | Margins stay near 20% and cash conversion remains above 100%. | →Stable |
| CounterThe moat depends on licensing relationships with a few large customers who could develop alternative architectures. | ||
The stock trades at a forward P/E of 67.2x and a PEG of 1.69, an expensive valuation that leaves little margin for error. Valuation breakdown | Earnings growth compresses the forward multiple below 50x at a flat price. | ↑Improving |
| CounterAfter a 54% drawdown the multiple is already well below its peak, and premium IP franchises often keep high multiples. | ||
Momentum scores 3.2 with a volume surge of 2.2x average on the selloff, a 9.6% gap down and price below the 200-day average, although that average is still rising 10.4% over 30 days. Momentum breakdown | Momentum recovers above 4.5 and price reclaims the 200-day average. | ↓Deteriorating |
| CounterHeavy-volume selling with falling OBV and 105% implied volatility signals distribution that could extend the drawdown. | ||
Analyst upside is 29.8% against 13.9% downside, a reward-to-risk of 2.15, while insiders sold $5.78M over 90 days with no purchases. Estimated upside | Price moves toward the $267.45 target and insider selling slows. | →Stable |
| CounterThe insider selling is only 0.003% of market cap, so it is negligible, but it is still not offset by any buying. | ||
Revenue is growing 22% year over year with earnings growth scoring a perfect 10, supporting the case for sustained expansion.
→StableGrowth breakdown
- Expectation
- Revenue growth stays above 15% over the next 12 months.
CounterA growth rate of 22% may not justify a forward P/E of 67.2x if growth decelerates.
Arm earns 20% margins with a wide economic moat, 128% FCF/net income conversion, a Rule of 40 score of 48 and a perfect 9/9 Piotroski F-Score.
→StableQuality breakdown
- Expectation
- Margins stay near 20% and cash conversion remains above 100%.
CounterThe moat depends on licensing relationships with a few large customers who could develop alternative architectures.
The stock trades at a forward P/E of 67.2x and a PEG of 1.69, an expensive valuation that leaves little margin for error.
↑ImprovingValuation breakdown
- Expectation
- Earnings growth compresses the forward multiple below 50x at a flat price.
CounterAfter a 54% drawdown the multiple is already well below its peak, and premium IP franchises often keep high multiples.
Momentum scores 3.2 with a volume surge of 2.2x average on the selloff, a 9.6% gap down and price below the 200-day average, although that average is still rising 10.4% over 30 days.
↓DeterioratingMomentum breakdown
- Expectation
- Momentum recovers above 4.5 and price reclaims the 200-day average.
CounterHeavy-volume selling with falling OBV and 105% implied volatility signals distribution that could extend the drawdown.
Analyst upside is 29.8% against 13.9% downside, a reward-to-risk of 2.15, while insiders sold $5.78M over 90 days with no purchases.
→StableEstimated upside
- Expectation
- Price moves toward the $267.45 target and insider selling slows.
CounterThe insider selling is only 0.003% of market cap, so it is negligible, but it is still not offset by any buying.
Per-dimension breakdown
Quality
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.5 |
| ROA | 3.6 |
| Gross margin | 10.0 |
| Op margin | 3.0 |
| Net margin | 10.0 |
| Current ratio | 7.7 |
| FCF quality | 9.3 |
| Moat | 8.4 |
| Rule of 40 | 8.0 |
| Piotroski F | 10.0 |
- ▸Strong margins: 20%
- ▸Excellent cash conversion: 128% FCF/NI
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
Growth
9.1/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 8.1 |
| EPS growth | 10.0 |
- ▸Strong growth: 22% YoY
Momentum
1.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+9.9%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 3.7 |
| Analyst rating | 7.5 |
| Price target | 9.3 |
- ▸Analyst upside: 43%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Negligible insider selling — $5,775,432 (0.003% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.2 |
| quality rank | 6.0 |
| growth rank | 3.7 |
Technical
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.9 |
| support resistance | 9.2 |
| 52w position | 0.0 |
| gap | 5.0 |
Risk (lower is worse)
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 3.9 |
| days to cover | 7.8 |
| volatility | 0.0 |
| put call | 3.7 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 0.0 |
| debt equity | 9.8 |
- ▸High IV: 109%
- ▸Above max pain $155
Catalyst
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 7.2 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 1 day
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- ASYMMETRY:2.4>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:1.3<4.5
- EARNINGS_PROXIMITY:1d<=7d
Warning (0)
none
Reward-to-Risk
2.37
Upside
+31.1%
Downside
13.1%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -55% (>40% off 52w high)
Investment implication
The F-path SELL output reflects an overall score of 5.1 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 9.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:1.3<4.5, EARNINGS_PROXIMITY:1d<=7d) reinforce the read. Current asymmetry R:R is 2.37 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 9.1, Quality at 7.5, and Insider at 7.3; the weakest are Momentum at 1.3, Value at 3.1, and Risk (lower is worse) at 3.5. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 2.37 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1High Quality Wide Moat
Trip ifNet margin falls below 12% from current 20%.
- P2Strong Revenue Growth
Trip ifRevenue growth falls below 12% year over year.
- P3Rich Valuation Risk
Trip ifForward P/E rises above 80x from current 67.2x.
- P4Selloff Weak Momentum
Trip ifPrice falls below the $192.81 stop level, more than 6.4% below $205.97.
- P5Analyst Upside Vs Insider Selling
Trip ifInsider selling exceeds $15M over a 90-day window.