Overview
- Arm, which was cut to Equal-Weight on Tuesday with a $150 target, fell about 3.7% in premarket trading.
- Morgan Stanley cited weak end-market demand and DRAM memory shortages that could slow growth through fiscal 2027.
- The bank warned that heavy R&D and engineering spend before meaningful chip sales could squeeze margins.
- Arm’s move into making its own chips could put it in competition with longtime licensees and risk customer pushback.
- The downgrade followed Arm’s AGI-focused CPU reveal with Meta and OpenAI as early customers, while Mizuho, UBS, Needham and Barclays kept higher targets.