According to Woofun AI, Arm Holdings (ARM.US) stood out on Tuesday as the broader semiconductor sector sold off, with its shares managing a modest gain against the market tide.
This unusual move was driven by a mix of deep-seated worries about the sustainability of artificial intelligence-related spending and the ongoing aftershocks from its earlier legal battle with Qualcomm (QCOM.US).
Macro sentiment was weak, with the Nasdaq down 0.56%, the S&P 500 off 0.13%, and the tech sector falling 0.6%.
Against that backdrop, comments from Broadcom (AVGO.US) CEO Hock Tan at the DBS Asia Future Forum in Singapore on Monday drew attention. He said plainly that many investors set extremely high expectations without real understanding, likening it to gambling in a casino, and noted that capital may be the biggest constraint.
A September study from the Brookings Institution further quantified this risk, projecting that U.S. AI infrastructure construction spending will reach $10.3 trillion by 2032, averaging 3.63% of U.S. GDP per year. According to data compiled by Woofun AI, such massive capital expenditure expectations are becoming a sword of Damocles hanging over tech stocks.
Legal uncertainty has also intensified market volatility. On Friday, a Delaware jury began hearing Qualcomm's (QCOM.US) lawsuit against Arm (ARM.US). Qualcomm (QCOM.US) accuses Arm (ARM.US) of breaching a licensing agreement and deliberately disrupting its business dealings with Meta (formerly Facebook) (META.US). This is the second legal dispute between the two in two years. In the five-day federal trial in Wilmington, the dispute centers on an architecture license agreement valid through 2033.
From a technical perspective, although Arm (ARM.US) shares are above their 200-day simple moving average of $221.53, they are 13.5% below the 20-day simple moving average of $290.20 and 7.2% below the 50-day simple moving average of $270.41, showing the characteristics of a pullback within an uptrend. The golden cross that appeared in April, when the 50-day moving average crossed above the 200-day moving average, set a long-term upward tone, even though the stock has retreated from its September high. Given that the stock hit a 52-week high of $452.70 in June and a 52-week low of $100.02 in February, volatility is significant. As of Tuesday, Arm (ARM.US) shares were up 0.94% at $257.65, and whether it can regain a firm footing above the 50-day moving average will be a key variable for its next move.
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