Needham analyst Charles Shi has maintained their neutral stance on ARM stock, giving a Hold rating today.
Charles Shi has given his Hold rating due to a combination of factors related to ARM Holdings PLC ADR’s recent financial performance and future outlook. The company reported strong results for the fourth quarter of fiscal year 2025, but its guidance for the first quarter of fiscal year 2026 was slightly below market expectations. Although ARM did not provide full-year guidance for fiscal year 2026, it indicated that it still expects a 20% growth year, despite macroeconomic uncertainties and a slower quarter-on-quarter growth in the first half of the year.
A key concern contributing to the Hold rating is the anticipated increase in operating expenses, which ARM has guided to rise significantly in the first quarter of fiscal year 2026, with continued modest increases throughout the year. This increase in expenses could lead to margin compression, affecting profitability. As a result, while revenue estimates remain relatively stable, there is a slight downward adjustment in earnings per share projections, prompting a cautious outlook and the Hold recommendation.