Morgan Stanley Keeps Arm Holdings at Overweight, PT Down to $180

Morgan Stanley Keeps Arm Holdings at Overweight, PT Down to $180

Morgan Stanley has maintained its Overweight rating on Arm Holdings (NASDAQ:ARM), but has adjusted its price target downward to $180 from $194. The change reflects the brokerage’s cautious approach to the potential shift in chip manufacturing by Arm, which is seen as transformative by the analysts [2].

Arm Holdings reported a strong fourth quarter, with revenue surging by 34% year-over-year to $1.24 billion and quarterly revenue surpassing the $1 billion mark for the first time. The growth was driven by a 18% increase in royalty revenue to $607 million, largely attributed to the rising adoption of Armv9 and Compute Subsystems (CSS) platforms across various sectors such as smartphones, cloud infrastructure, and automotive systems [2].

While the performance was impressive, Morgan Stanley has opted for a more conservative stance, acknowledging the potential risks associated with the transition to chip manufacturing. The brokerage believes that certain AI stocks may offer greater upside potential with less downside risk. However, they maintain that Arm Holdings remains a strong investment opportunity, particularly for those looking to benefit from the onshoring trend and Trump-era tariffs [2].

References:
[1] https://www.investing.com/news/stock-market-news/teradyne-upgraded-by-morgan-stanley-on-nvidia-optimism-4163469
[2] https://finviz.com/news/122069/morgan-stanley-increases-arm-holdings-arm-pt-to-194-on-transformative-chip-manufacturing-shift