Arm Holdings’ initial public offering was a test of investor appetite for the technology sector and so far the results have been mixed. Now a bevy of Wall Street analysts are here to say investors are being too pessimistic on the chip-design company.
There are a couple of reasons. It has been a tough period for tech stocks as the market has priced in higher-for-longer interest rates. Meanwhile, the first notes out on Wall Street were mostly from the bears who pointed out an array of risks including the company’s exposure to China, its reliance on the sluggish smartphone market, and the competitive risk from open-source chip architectures.
“Arm…is successfully leveraging its significant developer ecosystem and near 100% market share in smartphones to move into the automotive, industrial/IoT, and datacenter segments of the market,” J.P. Morgan analyst Harlan Sur wrote in a research note on Monday. Newsletter Sign-up Arm stock is down 0.4% at $53.88 in premarket trading on Monday. The shares are ahead of their $51 IPO price, but significantly down from the peak immediately following its listing.