Arm Holdings Plummets 2.97 as $0.5B Volume Ranks 184th Amid 119.2% Overvaluation Concerns and Sector-Wide Downturn

On August 29, 2025, Arm Holdings (ARM) declined 2.97% to $138.37, with a trading volume of $0.50 billion, ranking 184th in market activity. The stock has retreated from its 52-week high of $182.88, marking a 27.6% drop from peak levels. Analysts highlight valuation concerns, as a discounted cash flow analysis indicates the stock is overvalued by 119.2%, suggesting a potential disconnect between fundamentals and market pricing. Sector-wide pressures, including regulatory scrutiny and geopolitical tensions, have exacerbated investor caution, particularly in AI-driven semiconductor markets.

Technical indicators reinforce bearish sentiment. The 200-day moving average at $135.71 and Bollinger Bands' lower boundary at $132.13 serve as critical support levels. A breach below $132.13 could trigger a test of the 52-week low at $80, while a rebound above $138.41 might attract short-term buyers. The RSI at 56.51 and MACD histogram at +0.71 signal mixed momentum, with the latter hinting at sustained downward pressure. Options activity reflects strategic positioning, with put options like ARM20250905P131 offering high leverage for a 5% downside scenario, while call options target a potential rebound above key technical thresholds.

Historical backtesting of Arm's performance reveals patterns during intraday drops exceeding 3%. Data from 2022-2025 shows that such declines often precede extended bearish trends, particularly when regulatory risks or sector-wide demand shifts are present. Traders are advised to monitor the 200-day MA and Bollinger Bands for directional clues, as the stock's proximity to these levels could determine near-term stability. The semiconductor sector's fragility, compounded by Arm's valuation challenges, underscores a cautious outlook for the immediate future.