Arm stock slides on seller pressure as weak smartphone demand clouds earnings boost

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Arm drops 13.17% to $166.72 today

Highlights

Arm Holdings reported record Q2 fiscal 2027 revenue of $1.44 billion, up 27% with adjusted EPS of $0.52 beating expectations.
Data center royalties more than doubled and physical AI royalty revenue jumped 50%, but high memory costs reduced smartphone demand.
Shares of Arm dropped 13.17% to $166.72, with technical indicators signaling strong downside, low rebound probability and a likely trading range of $146.23 to $187.21 in coming days.

Record revenue growth tempered by memory costs and mixed sector demand

Arm Holdings reported a record Q2 fiscal 2027 revenue of $1.44 billion, increasing 27% year over year, with adjusted earnings per share of $0.52 that exceeded analyst estimates, according to Cryptobriefing. Data center royalties more than doubled, reflecting robust demand for Arm-based CPUs in AI and cloud infrastructure, while physical AI royalty revenue climbed 50%. However, persistently high memory costs have weighed on smartphone demand, as noted by Fool. This mix of strong headline results and sector-specific headwinds has influenced recent market sentiment.

Oversold signals and sell bias amid persistent downside momentum

On the technical chart, ARM is trading below its MA-20 and MA-50 on the main working timeframe and remains below the MA-200 on the daily chart. The Ichimoku Kijun resistance is located at $186.29. Momentum indicators remain weak, with MACD and ADX both signaling a sell bias. RSI, Stochastic RSI, and CCI are all reading in their oversold zones, indicating pronounced selling exhaustion that may precede a bounce, although no reversal is confirmed yet. Bull/Bear Power is substantially negative, highlighting persistent seller control in intraday sessions. The Awesome Oscillator is neutral, leaving the overall technical setup mixed amid substantial downside momentum and oversold signals.

Downside risk dominates as bullish breakout remains distant

Over the next two to three sessions, ARM is expected to trade within the $146.23 to $187.21 range. The probability of a rebound is currently low, with downside risk dominating the outlook in the immediate term. The baseline scenario is for sideways movement inside this volatility band. A bullish shift would require a sustained breakout above $186.29, while a breach of $146.23 would expose further losses.

Viktoras Karapetjanc, Traders Union expert, sees Arm Holdings’ sharp decline as an overreaction to mixed sentiment after strong Q2 results. He highlights the company’s robust growth in AI and cloud sectors, noting that headline numbers and sector performance remain positive despite softness in the smartphone market. The current technical landscape is decisively bearish, but oversold signals suggest downside may be losing steam. Karapetjanc notes, "With Arm’s fundamentals intact and AI-driven revenue expanding, I expect renewed interest once technical exhaustion plays out."

Previously it was reported that Arm Holdings was experiencing persistent selling pressure amid a pronounced bearish technical trend. The current analysis reaffirms this negative momentum, with downside risk prevailing and attention now focused on whether $146.23 will hold as the next key support level.

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

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.