ARM Holdings (ARM) stock was down more than 3% at the time of writing after top Bank of America analyst Vivek Arya downgraded his rating for the chip designer to Hold from Buy with a price target of $120, citing a slowdown in top-line growth and increasing dependence on SoftBank (SFTBY) in 2026. ARM stock has declined by 22% over the past year.
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Top Analyst Downgrades ARM Stock to Hold
Arya expects ARM Holdings’ revenue (both royalties/licensing) to slow down this year. The company generates revenue by licensing its architectures to chipmakers and by collecting royalties on each product sold. The 5-star analyst cautioned that global smartphone units could fall by a low single-digit percentage in calendar year 2026, compared to a low single-digit percentage growth last year, amid higher memory costs and supply constraints. This would be a major drawback for the ARM Client business.
For the licensing business, Arya sees the possibility of Fiscal 2026 revenue declining by about 5% if the fee from SoftBank, which now represents 25% to 30% of total licensing revenue, is excluded.
Nevertheless, Arya said that he continues to “like” ARM’s growth prospects in the data center business, in both server content and new silicon/chiplet opportunities.
Is ARM Stock a Buy, Sell, or Hold?
Overall, Wall Street has a Moderate Buy consensus rating on ARM Holdings stock based on 14 Buys, five Holds, and two Sell recommendations. The average ARM stock price target of $173.53 indicates about 62% upside potential.
