Arm Holdings plc (NASDAQ:ARM) stock fell more than 9% on Tuesday as investors sold high-growth semiconductor stocks during a broader technology pullback. The Nasdaq declined 2.60%, while the S&P 500 lost 1.04%, prompting traders to lock in gains after ARM’s strong 12-month rally.
Macro Pressure Weighs on Growth Stocks
Tuesday’s decline appeared to be driven by broader market sentiment rather than company-specific news. Investors rotated into defensive sectors, with the Consumer Staples Select Sector SPDR Fund (NYSE:XLP) rising 1.77% and the Utilities Select Sector SPDR Fund (NYSE:XLU) gaining 0.84%.
Despite the weakness in technology stocks, market breadth remained positive. Advancing stocks outnumbered decliners by roughly 1.8-to-1, and seven of the 11 S&P 500 sectors traded higher. That suggests selling was concentrated in high-valuation technology names rather than the broader market.
Technical Picture Remains Bullish
Even after Tuesday’s selloff, ARM continues to trade well above its key long-term moving averages. The stock remains about 37% above its 50-day simple moving average of $269.69 and roughly 119% above its 200-day simple moving average of $169.21.
The stock’s golden cross, formed in April when the 50-day moving average moved above the 200-day moving average, remains intact. However, the sharp rally to a 52-week high in June has left the stock vulnerable to profit-taking.
ARM is now trading only about 0.8% above its 20-day simple moving average of $367.77. A break below that level could lead to a deeper pullback toward intermediate support.
The moving average convergence divergence indicator remains above its signal line with a positive histogram. That suggests momentum continues to improve even as the stock experiences short-term volatility.
Key resistance stands near $428, while support is around $298.50.
Earnings and Analyst Outlook
ARM is expected to report quarterly results on July 29.
Analysts expect earnings of 36 cents per share, up from 35 cents a year earlier. Revenue is projected to increase to $1.27 billion from $1.05 billion.
The stock trades at about 480 times earnings, reflecting its premium valuation.
The analyst consensus rating remains Buy, with an average price forecast of $264.15. On Tuesday, Bank of America maintained its Neutral rating and raised its price forecast to $460. New Street Research downgraded the stock to Neutral on June 18, while Bank of America previously raised its price forecast to $335 on June 11.
ETF Exposure
ARM is a significant holding in several exchange-traded funds, including the REX AI Equity Premium Income ETF (NASDAQ:AIPI), the VanEck Fabless Semiconductor ETF (NASDAQ:SMHX), and the First Trust International Equity Opportunities ETF (NASDAQ:FPXI). As a result, fund inflows and outflows can influence trading activity in the stock.
Price Action
ARM Stock Price Activity: ARM Holdings shares were down 9.44% at $369.25 at the time of publication on Tuesday, according to Benzinga Pro data.
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