Shares of Arm Holdings and Cerebras Systems experienced sharp divergent moves this week, underscoring the volatile sentiment in AI semiconductor names even as fundamentals remain upbeat.
Arm slid 4.7% on Wednesday to $349.03, extending a 10%+ decline from prior sessions. The stock is down about 19% since the start of the week, though it remains up 227% year-to-date. Analysts at UBS and TD Cowen raised their price targets, citing potential from internally developed central processing units (CPUs) and the rise of agentic AI. UBS now sees the stock reaching $470, implying 33% upside, while TD Cowen set a $475 target. Both firms highlighted Arm’s transition from licensing architecture to full chip production, with CPU revenue possibly reaching $14–15 billion by 2030–2031. Bank of America also lifted its target to $460, keeping a neutral rating.
Meanwhile, Cerebras Systems plunged nearly 20% on Wednesday, flirting with its IPO price, after issuing full-year gross margin guidance of 38%–41%—well below the Q1 level of 47%. The company reported a narrower net loss and 94% revenue growth, but the margin outlook spooked investors. CEO Andrew Feldman dismissed the drop as a temporary operational decision: the firm is renting back its own systems from a large customer to accelerate capacity deployment while new data centers are built. This leaseback dents margins now but avoids turning away demand. Analysts maintained ratings but acknowledged the challenge of communicating such accounting nuances to a skeptical market.
The contrasting reactions illustrate how AI chip stocks remain sensitive to perceived profitability shifts, even when underlying growth stories are intact.
