Arm (ARM) Downgraded by BofA on Smartphone and Royalty Headwinds

2 weeks ago 10

Ghazal Ahmed

Sat, January 17, 2026 astatine 11:56 AM CST 2 min read

Arm Holdings plc (NASDAQ:ARM) is 1 of the Trending AI Stocks connected Wall Street. On January 13, BofA Securities expert Vivek Arya downgraded the banal from Buy to Neutral and lowered the terms people to $120 from $145. The standing downgrade comes up of ARM’s 3rd 4th fiscal twelvemonth 2026 results connected Feb. 4.

BofA has flagged near-term smartphone portion headwinds (memory cost), expanding reliance connected SoftBank successful licensing, and royalty slowdown (only astir 10% of royalties) for the stock.

Global smartphone shipments could diminution astatine a debased single-digit complaint year-over-year, compared with LSD successful CY25. This volition apt beryllium driven by higher representation costs and proviso constraints, which would beryllium a headwind to Arm’s Client concern that accounts for much than fractional of royalty revenue.

Despite each these factors, the steadfast continues to similar ARM’s imaginable successful information halfway implicit the long-term.

“For ARM, we emblem gross slowdown (both royalties/licensing) and expanding SoftBank reliance into CY26. Particularly, planetary smartphone units could diminution LSD YoY (vs. up LSD successful CY25) connected accrued representation costs and proviso constraints, a headwind to ARM Client (>50% of Royalty sales). Meanwhile, CSS adoption (or contented expansion) is inactive constricted and successful aboriginal stages. For Licensing, we emblem FY26 gross could really diminution -5% YoY (if we exclude SoftBank which present represents 25–30% of full Licensing and could rise circular financing concerns). Longer-term though, we proceed to similar ARM’s imaginable successful information center, successful some server contented ($ per core, much cores, stock gains) and caller silicon/chiplet opps.”

Arm Holdings plc (NASDAQ:ARM) is simply a semiconductor and bundle plan institution that designs and manufactures semiconductor exertion and different related products.

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