Arm shares drop around 7.5% after renewed selling pressure and technical weakness

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Arm slides 7.57% to $297.86 today

Highlights

Arm Holdings' AGI CPU architecture drove a doubling of demand, notably with new adoption from Oracle Cloud Infrastructure.
High-margin licensing revenue surged 29% year-over-year, supporting strong double-digit revenue growth ahead of July 29, 2024 earnings.
Shares face short- and medium-term selling pressure, with trading expected between $273.92 and $321.81 over the next week, though longer-term momentum remains bullish.

Corporate adoption and revenue gains offset by persistent market pressure

Arm Holdings' advanced AGI CPU architecture saw demand double, with corporate adoption reported by Oracle Cloud Infrastructure. The company posted double-digit revenue growth, with a 29% increase in high-margin licensing activity over the last period. Earnings are scheduled for release on July 29, 2024, though price action has remained under broader selling pressure.

Anton Kharitonov, expert at Traders Union, notes that Arm Holdings faces renewed downside risk after slipping below key moving averages. He sees recent selling pressure and technical signals pointing to persistent weakness, despite strong licensing growth and corporate adoption news. The MACD's divergence from other indicators suggests unreliable support for a reversal. Kharitonov cautions that the bearish configuration and elevated volatility raise the probability of further declines, especially if support at $297.44 fails. "The recent price action shows that optimism around AI adoption alone cannot offset clear warning signals from both chart structure and momentum indicators," he states.

Viktoras Karapetjanc, expert at Traders Union, believes Arm's double-digit growth and increased corporate adoption reaffirm its leadership in AI-driven compute. He sees the recent selloff as a tactical correction rather than a structural risk, with the bullish long-term setup still in place above the 200-day average. The expert highlights robust demand and margin expansion as strategic drivers looking forward. He remains constructive despite short-term volatility, expecting renewed upside if $301.23 is cleared. "This market phase offers opportunity — Arm’s strong fundamentals and sector tailwinds point to further growth once near-term pressures dissipate," he says.

Parshwa Turakhiya, analyst, sees intense short-term volatility in Arm as sellers dominate recent sessions. He identifies a technical setup where the stock tests key support at $297.44 while oscillators flash oversold readings. This environment invites tactical rebounds but also sharp downside if levels break. Turakhiya emphasizes that sentiment is shaky, with news of strong demand failing to shift the bearish intraday bias. "Traders should watch for a volatility squeeze — this setup rewards nimble positioning around short-term pivots," he advises.

Short-term weakness persists as indicators diverge on reversal risk

Arm is trading below its 20-day and 50-day moving averages at $360.01 and $301.23, respectively, but remains above the 200-day moving average at $178.01. This configuration suggests continued short- and medium-term downside risk, even as the longer-term structure is bullish. Key levels include near-term resistance at $301.23 and support at $297.44. Momentum signals are mostly negative. The MACD gives a "Strong Buy" signal, but both the ADX and RSI indicate weakness, and the CCI shows ongoing selling pressure. Stochastic RSI and Bull/Bear Power values are oversold, with BBP confirming seller dominance during the session. The stock fell to $297.86 after opening with a downside gap of about $12.85, trading near the session low. Intraday volatility is significant at 5.78%. Oscillators display a clear divergence between prevailing weakness and the possibility of a reversal.

Earlier, analysts noted that despite near-term selling pressure and volatility, Arm Holdings maintained a resilient longer-term bullish trend driven by strong demand in AI and semiconductors. The latest session reinforces this outlook with double-digit revenue growth and growing corporate adoption, placing the focus on whether Arm can sustain support above $297.44 ahead of its upcoming earnings release.

Source of Data: ARM Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

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