Chip stock Arm Holdings (NASDAQ:ARM), depending on who you talked to, was either the most overhyped stock event in months or the dawning of a brand new day for investing. For Cathie Wood of ARK Innovation (NYSEARCA:ARKK) fame, it was an event to avoid. With ARM down nearly 3% in Wednesday afternoon’s trading, Wood’s explanation of why she stayed out of it altogether makes just a little more sense in retrospect.
Wood’s explanation was simple enough – it was overvalued. Basically, Wood stayed out of Arm because she thought it cost too much given its competitive position in the broader overall market. Since Arm closed at $63.59 per share at the end of its first day of trading but is currently selling around $53, Wood might have had a point all along. Wood, however, had great things to say about artificial intelligence and its long-term potential.
Wood also had some less pleasant things to say about her own fund, Ark Invest. More specifically, the Ark Innovation Fund, regarded by some as its “flagship” fund. Wood projected a 15% annual growth rate for Ark Innovation through 2028. That’s really quite good in isolation, but compared to previous years, it’s barely a patch on those issues. While Wood has gone to some lengths to blame Federal Reserve policies for the fund’s decline—and not without reason given the unusual lengths it’s gone to lately—others suggest that the problem isn’t all on the Fed.
Is ARM Holdings a Good Buy Right Now?
ARM Holdings, meanwhile, has a pretty even split for analysts. With one Buy rating, two Holds, and one Sell, ARM Holdings stock has a consensus rating of Hold. Further, ARM Holdings stock features another point that makes it a good one for Cathie Wood to avoid: a 3.42% downside risk thanks to its average price target of $51.67.