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Technology & Semiconductor Equity Commentary
Arm Holdings looks unattractive because its nearly 300 P/E ratio is difficult to justify against only 22% year-over-year revenue growth. x.comÂ
Arm is not worth buying more at about 150x forward earnings. The bottleneck it addresses and its pricing power are real, but it is still unproven whether Arm can capture enough of the profit to justify that multiple. x.comÂ
SoftBank owns about 90% of Arm, leaving a locked-up float that looks almost certain to be pushed far higher in the early innings of a GPU mania. The bet is not on Arm's technology but on others squeezing that tight float. x.com x.comÂ
Arm looks wildly overvalued at nearly a $500 billion market cap, about 96x sales and 150x next-twelve-month earnings. The euphoria shows in @steve2bacon calling it the easiest hold ever. x.comÂ
Arm's valuation makes no sense unless analyst estimates are off by 100%. It is one of the few true bubbles, alongside CrowdStrike in software, Tesla among mega caps and Costco at 50x; elsewhere there are pockets of dumb behavior but few true bubbles. Breadth is key: as this cycle's winners correct, the question is whether stocks that have not been involved can lift the market. x.comÂ
Arm remains a long-term winner over the next 10 years, but not a short-term buy after running too far, too fast. Its performance has to catch up with at least part of the move, so buying at these levels carries elevated risk if a negative surprise hits. x.comÂ
Arm is still expensive at about 40x revenue with only 20% growth, so it has not fallen enough. x.comÂ
Arm's forward P/E near 190 already prices in much of its expected growth, leaving a limited margin of safety. Its fundamentals are sound and AI and data center demand is strong, but a long-term position is better taken after a valuation pullback or further earnings delivery. x.comÂ
Arm's float is tiny, with about 90% held by SoftBank, while its architecture is set to become ubiquitous in every device, so a sharp rise in the stock is no surprise. x.comÂ
Arm cannot even raise its $2 billion customer-interest figure in what should be the greatest CPU market of our lifetimes, and whether it can deliver even that is still unproven. x.comÂ