Arm's 0.81 Drop Slides to 261st in Trading Activity as Short Interest Falls 11% Amid AI-Driven Growth Outlook

On August 6, 2025, Arm Holdings (ARM) declined 0.81% with a trading volume of $0.44 billion, marking a 27.82% drop in daily turnover compared to the previous day. The stock ranked 261st in trading activity, reflecting reduced short-term liquidity interest.

Short interest in Arm has fallen 11.03% since its last report, with 16.31 million shares sold short—equivalent to 11.94% of available float. This decline suggests a potential shift in market sentiment, though it does not guarantee near-term price direction. Analysts note that Arm’s short interest remains higher than the 4.93% average among its peers, indicating lingering bearish positioning despite the recent drop.

Market dynamics highlight Arm’s strategic position in AI-driven infrastructure. The company’s architectures are increasingly adopted in data center servers by major tech firms, with demand for power-efficient custom chips expected to accelerate. Recent guidance from Arm’s management forecasts a 26% sales increase for the September quarter, driven by robust royalty revenue and growing AI infrastructure needs. However, mixed quarterly results—marked by a 13% decline in non-GAAP net income—underscore ongoing operational pressures from elevated R&D costs.

Backtesting results reveal that a strategy of purchasing the top 500 stocks by daily trading volume and holding for one day generated a 166.71% return from 2022 to the present. This outperformed the benchmark by 137.53%, emphasizing the role of liquidity concentration in short-term gains, particularly during volatile market conditions.