Arm Holdings plc (NASDAQ:ARM) shares fell Tuesday after Morgan Stanley struck a more cautious tone on the company’s AI-driven transition, dialing back near-term expectations even as long-term prospects remain intact.
The firm downgraded the stock to Equal-Weight from Overweight while lifting its price target to $150 from $135, signaling a more balanced risk-reward outlook.
Analyst Take
Morgan Stanley analyst Lee Simpson said Arm’s push into chip development aligns with the rise of agentic AI but introduces execution risks in the near term.
He pointed to strong early progress, including talent acquisition and initial product delivery, but warned that slow commercial scaling and rising costs could limit upside. Simpson also flagged DRAM supply constraints and potential conflicts with existing licensees as factors that may cap valuation at $150.
Simpson …
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