Is Arm Holdings (ARM) a Buy for 2026 Despite Short-Term Volatility?

The question of whether Arm Holdings (ARM) merits inclusion in a 2026 investment portfolio hinges on a nuanced interplay between its short-term technical volatility and long-term fundamental promise. As the semiconductor industry navigates a pivotal transition toward artificial intelligence (AI) and data center innovation, ARM's strategic positioning and financial performance warrant a closer examination of both technical indicators and structural growth drivers.

Technical Analysis: A Tale of Mixed Signals

Over the past 60 days, ARM's stock has exhibited a volatile trajectory, closing at $143.06 on November 14, 2025, after a 1.96% intraday gain. However, this recent uptick masks a broader bearish trend: the stock declined in 8 of the last 10 trading sessions, eroding 15.19% of its value during that period. Technical indicators paint a mixed picture. While the Relative Strength Index (RSI) of 50.3 suggests neutral market sentiment-neither overbought nor oversold-the Moving Average Convergence Divergence (MACD) line crossing above its signal line hints at emerging bullish momentum.

The moving average analysis further complicates the outlook. The 20-day simple moving average (SMA_20) remains above the 60-day SMA, signaling a short-term bullish trend, yet the broader context reveals a bearish lean, with two negative and two positive signals as of November 15, 2025. Resistance levels at $177.80 and $192.45, alongside support at $85.82, underscore the stock's susceptibility to sharp corrections. A predictive AI model, however, forecasts a 60-day average price of $116.25, implying a modest recovery from current levels despite the near-term turbulence.

Fundamental Analysis: AI-Driven Growth and Structural Strength

While technical indicators suggest caution, ARM's fundamentals present a compelling case for long-term optimism. For the fourth quarter of 2025, the company reported record revenue of $1.24 billion, a 34% year-over-year increase, with full-year revenue reaching $4.01 billion-a 24% rise compared to 2024. This growth is underpinned by robust performance in licensing and royalty revenue, with the latter growing 20% to $2.17 billion in 2025.

The company's strategic pivot toward AI and data centers is particularly noteworthy. The Neoverse platform, designed for server and supercomputing workloads, doubled its revenue in 2025, with Arm projecting a 50% market share among top hyperscalers by year-end. Additionally, the transition to the v9 architecture has driven royalty revenue growth, signaling a shift toward higher-margin offerings. These trends align with long-term projections of $7.4 billion in revenue and $2.3 billion in earnings by 2028, assuming 21.5% annual growth.

However, challenges persist. Rising R&D expenditures and competition from in-house chip development by major clients, such as Apple and Amazon, pose headwinds. Moreover, ARM's trailing EV-to-EBITDA multiple of 93 times reflects a valuation that already incorporates much of its anticipated future growth, potentially limiting near-term upside.

Balancing the Equation: A 2026 Outlook

For investors considering ARM in 2026, the key lies in reconciling short-term volatility with long-term potential. Technically, the stock's current positioning near key support levels and the AI model's modest price forecast suggest that dips could present entry opportunities for patient investors. Fundamentally, the company's AI-driven roadmap and high-margin licensing model offer a durable foundation for growth, particularly as global demand for AI infrastructure accelerates.

Yet, prudence is warranted. The high valuation multiples and competitive pressures necessitate a disciplined approach, with investors advised to monitor technical levels and earnings momentum closely. For those with a multi-year horizon, ARM's structural advantages in the AI era may justify the near-term risks, provided macroeconomic conditions and sector dynamics remain favorable.

Conclusion

Arm Holdings stands at a crossroads of volatility and opportunity. While its 60-day technical profile reflects market uncertainty, the company's financial performance and AI-centric strategy underscore a compelling long-term narrative. For 2026, ARM could be a buy-but only for investors prepared to navigate the near-term turbulence in pursuit of its transformative growth potential.