Arm price target cut 26% to $350 as TD Cowen flags valuation risk

TD Cowen lowered its price target on Arm Holdings Plc by 26 percent to $350, citing valuation concerns amid a deepening rout in semiconductor stocks.

The $125 reduction from the previous $475 target reflects the investment bank's reassessment of Arm's growth trajectory and market multiple, according to the note published Wednesday. The new target still implies upside from Arm's current trading level, though the magnitude has narrowed significantly.

Arm shares have fallen more than 8 percent in each of the past two trading sessions, extending losses as the Philadelphia Stock Exchange Semiconductor Index dropped to a 2.5-month low. The broader chip sector has come under pressure from fresh concerns over artificial intelligence spending returns and intensifying competition from China, with peers including Advanced Micro Devices Inc., Micron Technology Inc. and Applied Materials Inc. all posting double-digit percentage declines this week.

The price target cut adds to a challenging week for the British chip designer, whose architecture powers most smartphone processors and is increasingly used in AI data centers. Arm's valuation has been a point of debate among analysts since its blockbuster initial public offering, with bulls pointing to its near-monopoly in mobile chip licensing and bears questioning whether the AI opportunity justifies a premium multiple. Investors will watch for any rating changes from other bulge-bracket firms that could further influence the stock's direction.

This article is for informational purposes only and does not constitute investment advice.