ARM: Solid Headline Growth Masking Organic Slowdown; Neutral Stance Pending Clarity on Custom Silicon Strategy

Needham analyst Charles Shi has maintained their neutral stance on ARM stock, giving a Hold rating today.

Charles Shi has given his Hold rating due to a combination of factors related to ARM’s growth profile and revenue mix. While the company delivered results above expectations and raised its near‑term outlook, a growing portion of its revenue now comes from SoftBank, which masks a sharp slowdown in the underlying “organic” business. Shi notes that organic growth is projected to fall from just over 21% in fiscal year ending 2025 to under 9% in fiscal year ending 2026, suggesting that the core business is losing momentum even as consolidated numbers look strong.

At the same time, management is guiding to a reacceleration to about 20% growth in fiscal 2027 and sees further upside in fiscal 2028 as a new custom silicon initiative begins to scale. Shi appears to recognize this longer‑term opportunity but also acknowledges that it remains largely prospective until the strategy is fully detailed and execution risk becomes clearer. With an investor event scheduled for March 24 to explain the silicon roadmap, he prefers to stay on the sidelines for now, maintaining a neutral stance until there is better visibility into how and when these initiatives can offset the current deceleration in organic growth.

In another report released today, TipRanks – OpenAI also reiterated a Hold rating on the stock with a $114.00 price target.