HSBC downgrades Arm to Reduce on AI PC uncertainty

HSBC downgraded Arm to Reduce from Hold with a price target of $105, up from $100. The artificial intelligence PC narrative is not as bullish as previously expected given uncertainty over the total addressable market potential, the analyst tells investors in a research note. The firm sees short-term downside risk to Arm’s earnings from increasing Android smartphone uncertainty. After rallying 116% year-to-date, However, Arm shares trade a significant premium relative to its large cap semiconductor peers, the analyst tells investors in a research note. HSBC cut fiscal 2025 and 2026 earnings forecasts to reflect a lack of smartphone restocking momentum and the weaker AI PC narrative. It finds it difficult to justify a further re-rating beyond its new target price.