Is Arm Holdings (ARM) a Buy, Hold or Sell?

Arm Holdings — our independent, AI-built valuation and rating, in brief.

SELL (reduce)

12-mo fair value

$140.00

To fair value

−54%

By José Luis Pascual, CFA · report dated 2026-08-02 · fair value derived independently of the market price.

The thesis, in brief

Arm's headline ~22% growth is propped by a ~$800m/yr low-margin related-party design-services contract with its 88% parent (~13-14% of revenue) and a sub-40%-gross-margin silicon pivot while third-party royalty growth decelerates to the low teens and SBC still exceeds GAAP net income — so FY28E consensus EPS of $3.03 is too high and 79x forward is unsustainable; the thesis is wrong if royalty growth re-accelerates above 20% and AGI CPU revenue clears $2bn in FY28 at 50%+ gross margin without further SoftBank revenue support

How we value it

We value Arm Holdings using Justified forward P/E: 47.5x FY28E non-GAAP EPS $2.95; cross-checked vs 10-yr DCF on management's own FY31 targets at 10.5% consensus WACC ($106). The 12-month fair value is set from that intrinsic estimate first, then compared to the market to read the upside or downside — never anchored to the current price.

What the full report covers

Business & moat + industry cycle
Earnings quality & normalized EPS
Returns on capital (ROIC vs WACC)
Balance-sheet safety
Two independent valuations (DCF + multiples)
Bear / base / bull fair values
Earnings-call analysis
Insider activity & positioning
Technicals (RSI / ADX)
A falsifiable thesis

Read the full Arm Holdings report

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