Arm's Chip Business Faces Near-Term Risks -- Market Talk

Dow Jones04-07 23:16

1116 ET - Arm Holdings' shift to selling semiconductor chips is strategically sound given the increasing popularity of agentic AI, but the commercial ramp up is likely to take some time, Morgan Stanley analysts write in a note. The chip business is likely to be loss making initially, they write, although they project an earnings before interest and taxes margin of more than 30% on sales of $14.4 billion by the end of fiscal 2031. There are other near-term risks: the memory chip shortage weighing on consumer electronic sales, continuing litigation with Qualcomm, and the possibility that Arm's move into chip-making may put it in competition with licensees like Nvidia and Apple. Morgan Stanley raises Arm's price target to $150 but downgrades the stock to equal-weight from overweight. Shares are down 7.1% in late morning trading. (elias.schisgall@wsj.com)

(END) Dow Jones Newswires

April 07, 2026 11:16 ET (15:16 GMT)

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