The US Federal Trade Commission has opened a formal antitrust investigation into Arm Holdings (NasdaqGS:ARM), examining whether its CPU licensing practices could restrict competition and alter how chip designers access the company’s core technology.

The stock has pulled back sharply in the latest session, with a 1 day share price return of down 8.46%. It still shows strong momentum with a 30 day share price return of 31.27% and an 82.31% year to date share price return. The 1 year total shareholder return sits at 53.84% as investors balance record quarterly results, AI related growth ambitions and fresh regulatory and supply chain risks.

If you are comparing Arm to other AI focused opportunities, it could be a useful moment to scan the market for 42 AI infrastructure stocks

With Arm now valued at about US$243.1b and trading only around 9.5% below the average analyst price target, the question is simple: are you looking at a rare pullback in a high growth AI platform, or a stock where the market is already paying up for years of future growth?

Most Popular Narrative: 434.1% Overvalued

Goran_Damchevski’s widely followed narrative puts Arm’s fair value at $39.16 per share, far below the recent $209.16 close, which sets a very cautious starting point.

ARM is still in a speculative phase and I’m maintaining my $53B forward value for 2029. In Q2’25 ARM reported revenues of $844M, up 5% YoY. Sales were down 10% from Q1, as the company marked its first sequential drop after Q4’FY23. The company made $3.5B in revenues over a 12-month period, and is up by 18% on a TTM basis.

Curious how a fast growing revenue base, robust margins and a future earnings multiple together support such a low fair value versus today’s price? The key assumptions stretch across growth, profitability and what investors might pay for those earnings. Want to see exactly how those moving parts combine into that $39.16 figure?

Result: Fair Value of $39.16 (OVERVALUED)

However, there are clear risks that could challenge this cautious view, including stronger than expected royalty growth from AI chips and any favorable resolution to the Qualcomm dispute.

Next Steps

With such a split between risks and rewards around Arm, it makes sense to look at the data firsthand and move quickly to sharpen your own view with 1 key reward and 1 important warning sign

Looking for more investment ideas?

If Arm is only one part of your watchlist, this is a good time to widen your search and give yourself more quality options to compare.

• Target dependable income by reviewing 12 dividend fortresses that could help anchor a portfolio with regular cash returns.
• Hunt for mispriced opportunities through the 50 high quality undervalued stocks that may offer quality at more reasonable valuations.
• Protect your downside by focusing on the 66 resilient stocks with low risk scores that score well on resilience and financial strength.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.