‘One of my favorite long-term stocks”—ARM Holdings’ rollercoaster year isn’t scaring off AI bulls

Arm Holdings (ARM) stock has shed one-fourth of its value since financial analyst Jon Markman famously called the chip designer a “painful hold.”

But despite the sell-off, he’s still betting big on the company’s long game, and its central role in the CPU architecture supply chain.

“I am a longer-term bull,” Markman wrote on Feb. 5, when ARM was trading above $171. “Admittedly, this has been a painful hold.”

$ARM is having a slow and steady ascent. I am a longer-term bull. Admittedly, this has been a painful hold pic.twitter.com/mMJTZDSkwl

undefined Jon Markman 🛸 (@jdmarkman) February 5, 2025

That sell-off continued in March and April as the stock tumbled to around $85. But since bottoming, it’s clawed back to $130. Although it’s break-even for the year, it is still far below Markman’s earlier targets.

Even so, the veteran analyst is doubling down.

On May 28, he reaffirmed his conviction in ARM, calling it “one of my favorite long-term stocks.” Two weeks earlier, he had ranked it alongside Nvidia (NVDA), Costco (COST), and Broadcom (AVGO) as one of his top names.

$ARM is one of my favorite longer-term stocks. pic.twitter.com/E560Fehihs

undefined Jon Markman 🛸 (@jdmarkman) May 28, 2025

Tariffs throw cold water on recovery

Like much of the tech sector, ARM has been caught in the crosshairs of Trump’s trade war this year. But unlike most of its peers, Arm’s business is directly exposed to trade disruptions.

In its most recent report, Arm flagged that risk and guided second-quarter revenue between $1 billion and $1.1 billion,well below Wall Street estimates.

The warning came despite a better-than-expected Q1, in which sales hit $1.24 billion.

“Based on our current visibility, we expect a limited, direct impact on our royalty and licensing revenues,” CFO Jason Child told investors. “We have less visibility into the indirect impact on end demand. In our royalty business, we estimate that 10% to 20% of our revenues stems from shipments into the U.S.”

That “limited” direct exposure matters because royalty and licensing fees make up more than half of Arm’s revenue. Even a small hit could ripple through the company’s top line.

As analyst Ryan Smith pointed out, Arm’s newer Armv9 architecture already accounts for roughly 25% of total revenue and it’s designed specifically to power the next wave of data-intensive AI applications.

That gives Arm a front-row seat in the AI race.

As Investors Observer noted, the company is a core player in the AI production chain. It was also named among the official partners in President Trump’s Stargate initiative, which aims to accelerate U.S. AI infrastructure development.