Nasdaq Bear Market: 2 Stocks Down 53% and 67% to Buy Before They Double

The Nasdaq Composite index has tumbled more than 20% from its record high, entering a bear market. This decline has led analysts to see the situation as an opportunity to buy shares of Arm Holdings (ARM -10.32%) and The Trade Desk (TTD -5.81%). Arm Holdings' stock has fallen 53% from its high, partially because investors were disappointed with the guidance management provided in the latest quarter. However, among the 41 analysts that follow the company, the median target price is $177.50 per share, implying 106% upside from the current share price of $86. The Trade Desk stock has fallen 67% from its high, partially because the company reported disappointing financial results in the latest quarter. Among the 39 analysts that follow the company, the median target price is $103 per share, implying 124% upside from the current share price of $46.



The significant declines in Arm Holdings and The Trade Desk can be attributed to several key factors, which are distinct from the broader market trends and the impact of recent tariff measures.

Arm Holdings:
1. Disappointing Guidance: Arm Holdings' stock has fallen 53% from its high, partially because investors were disappointed with the guidance management provided in the latest quarter. Despite reporting solid financial results, including a 19% increase in revenue to $983 million and a 26% increase in non-GAAP net income to $0.39 per diluted share, the stock tumbled after the report because Arm narrowed its full-year guidance despite beating Wall Street's estimates in the third quarter. Investors were disappointed that the announcement did not give a more upbeat outlook.

2. Market Position and Growth Potential: Arm Holdings develops and licenses central processing unit (CPU) architectures and subsystems to companies that develop custom chips. Its processors are widely used in mobile devices, especially smartphones, and its technology is also gaining market share in data centers. The major public clouds—operated by Amazon, Microsoft, and Alphabet's Google—have all deployed Arm-based chips. Arm architectures are more power-efficient than x86 architectures from Intel and AMD, which is a key advantage for its dominance in smartphone processors and growing importance in data center chips, particularly with power-intensive workloads like artificial intelligence (AI).

3. Analyst Sentiment: Among the 41 analysts that follow the company, the median target price is $177.50 per share, implying 106% upside from the current share price of $86. Wall Street expects Arm's earnings to increase 32% annually through fiscal 2026, which ends in March 2026. This consensus estimate makes the current valuation of 62 times earnings look reasonable, especially when Arm has reported above-consensus results for six consecutive quarters.

The Trade Desk:
1. Disappointing Financial Results: The Trade Desk stock has fallen 67% from its high, partially because the company reported disappointing financial results in the latest quarter. Revenue rose 22% to $741 million, well below the $756 million management anticipated. Non-GAAP earnings increased 44% to $0.59 per diluted share. CEO Jeff Green blamed the revenue shortfall on a "series of small execution missteps," and outlined what the company is taking to fix the issues.

2. Market Position and Growth Potential: The Trade Desk operates the largest independent demand-side platform (DSP), software that helps clients automate, optimize, and measure advertising campaigns across digital channels. It was among the first adtech companies to incorporate artificial intelligence into its DSP, and CEO Jeff Green says it still has "the most advanced data-driven decision-making platform" in the industry.

3. Analyst Sentiment: Among the 39 analysts that follow the company, the median target price is $103 per share, implying 124% upside from the current share price of $46. Wall Street expects The Trade Desk's earnings to grow at 14% annually through 2026. That makes the current valuation of 27 times earnings seem reasonable, but some analysts think the consensus is too low. Adtech spending is forecast to grow at 14% annually through 2030, so The Trade Desk is likely to grow faster, provided it keeps gaining market share. The Trade Desk topped the consensus earnings estimate by an average of 10% during the last four quarters.

Comparison to Broader Market Trends and Tariff Measures:
1. Broader Market Trends: The Nasdaq Composite index has tumbled more than 20% from its record high, entering a bear market. This decline is attributed to investors fleeing riskier assets on fears that tariffs imposed by President Donald Trump could spark a trade war and tip the global economy into recession. The S&P 500 Index is down 14.9% from its record closing high, just 5% away from confirming a bear market. The benchmark S&P 500 Index (.SPX) is down 14.9% from its 6,144.15 record closing high, just 5% away from confirming a bear market.

2. Impact of Tariff Measures: The recent tariff measures have weighed heavily on markets. The benchmark S&P 500 Index (.SPX) is down 14.9% from its 6,144.15 record closing high, just 5% away from confirming a bear market. The Nasdaq Composite index is down about 20% from its December 16 record closing high of 20,173.89. A bear market is confirmed when an index closes down at least 20% from its most recent record high finish, according to a widely used definition. The tariffs and fears of retaliation by other trade partners have weighed on markets. The benchmark S&P 500 Index (.SPX) is down 14.9% from its 6,144.15 record closing high, just 5% away from confirming a bear market. The Nasdaq Composite index is down about 20% from its December 16 record closing high of 20,173.89. A bear market is confirmed when an index closes down at least 20% from its most recent record high finish, according to a widely used definition.



In summary, the declines in Arm Holdings and The Trade Desk are primarily driven by company-specific factors such as disappointing guidance and financial results, rather than the broader market trends and the impact of recent tariff measures. Despite the recent setbacks, analysts believe that both companies have strong potential for growth and are likely to see their stock prices rebound in the coming years. Investors with a time horizon of at least three years should feel comfortable buying a position now.