Assessing Arm Holdings (NasdaqGS:ARM) Valuation As Mixed Recent Returns Meet Rich Revenue Expectations

Simply Wall St.02-23

AdvertisementWhat Arm’s recent performance tells you right now Arm Holdings (NasdaqGS:ARM) has seen mixed share performance recently, with a 1 day decline of 1.1%, a small gain over the past week, an ...

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See our latest analysis for Arm Holdings. With the share price at $125.58, the mix of a 9.46% year to date share price return and a 1 year total shareholder return of 13.3% decline suggests recent upside momentum is still working through a weaker longer term result as investors reassess Arm Holdings’ growth potential and risk profile. If Arm’s recent swings have you thinking about where else AI related growth might show up, it could be worth scanning our list of 58 profitable AI stocks that aren't just burning cash as another way to source ideas. So with Arm growing revenue and net income while the share price sits at $125.58 and trades below the average analyst target, should you view this as a genuine entry point, or as a sign that potential future growth is already fully reflected in the price? Most Popular Narrative: 220.7% Overvalued According to the most followed narrative, Arm’s fair value sits well below the last close of $125.58, which points to a wide gap between price and fundamentals.  ARM is a leader with a saturated number of customers limiting future growth. It is in a highly competitive landscape and needs to innovate beyond patent expirations in the 2030s.  Read the complete narrative. Curious why this narrative still sees value in a mature customer base? Revenue growth, margin expansion, and a future profit multiple sit at the core of the thesis, and the detailed projections tell a very specific story about how Arm could get there. Result: Fair Value of $39.16 (OVERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, this narrative could be challenged if Arm keeps securing long term deals like Apple’s, or if new products help offset future patent expirations. Find out about the key risks to this Arm Holdings narrative. Another View: High P/S Signals Rich Expectations That $39.16 fair value comes from a detailed narrative, but our P/S work highlights a different kind of tension. Arm trades at a P/S of 28.6x versus 5.8x for the US Semiconductor industry and 12x for peers, while our fair ratio is higher at 41.2x. This gap suggests the market is already assigning Arm a premium, yet our fair ratio implies investors could be willing to pay more if growth and margins align with expectations. The question for you is whether that kind of pricing leaves enough room for error. See what the numbers say about this price — find out in our valuation breakdown. NasdaqGS:ARM P/S Ratio as at Feb 2026Next Steps If this mix of optimism and caution around Arm feels familiar, it is a good moment to look at the numbers yourself and move quickly to frame your own view, starting with the 1 key reward. Looking for more investment ideas? If Arm is only one piece of your watchlist, do not stop here. Broaden your opportunity set now and give yourself more options to compare.  Hunt for quality at a discount with our 54 high quality undervalued stocks that screens for strong businesses trading below what their fundamentals may justify. Strengthen your income stream by reviewing our 15 dividend fortresses focused on companies offering 5%+ yields with an emphasis on stability. Prioritize resilience by scanning the 87 resilient stocks with low risk scores where companies score well on financial strength and business risk.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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