According to Woofun AI, Arm Holdings (ARM.US) stood out in a broader market decline across the semiconductor sector on Tuesday, posting a modest price increase despite the downturn. This unusual movement reflects underlying market concerns about the sustainability of AI-related spending, alongside ongoing volatility triggered by its prior legal dispute with Qualcomm (QCOM.US).
Macro market sentiment remains weak, with the Nasdaq Index falling 0.56% and the S&P 500 declining 0.13%, while the technology sector dropped 0.6%. Against this backdrop, Hock Tan, CEO of Broadcom (AVGO.US), drew attention during his speech at the DBS Asia Future Forum in Singapore on Monday, stating that many investors set overly high expectations without adequate understanding, likening it to gambling in a casino, and emphasized that capital may be the greatest constraint. A September study by the Brookings Institution further quantified this risk, projecting that U.S. spending on artificial intelligence infrastructure will reach $10.3 trillion by 2032, averaging 3.63% of U.S. GDP annually.
Woofun AI's compiled data shows that such massive capital expenditure expectations are becoming a sword of Damocles hanging over tech stocks.
Legal uncertainty has further intensified market volatility. On Friday, a jury in Delaware began hearing the case in which Qualcomm (QCOM.US) sued Arm (ARM.US). Qualcomm alleges that Arm violated its licensing agreement and intentionally undermined its business relationship with Meta (formerly Facebook) (META.US). This is the second legal dispute between the two parties within two years, and the five-day federal trial in Wilmington centers on an architecture licensing agreement valid until 2033.
From a technical perspective, although Arm's (ARM.US) stock price is above the 200-day simple moving average ($221.53), it is 13.5% below the 20-day simple moving average ($290.20) and 7.2% below the 50-day simple moving average ($270.41), indicating a pullback within an uptrend. A golden cross in April—the 50-day moving average crossing above the 200-day moving average—established a long-term bullish bias, despite the stock's decline from its September high. Given that the stock reached a 52-week high of $452.70 in June and a 52-week low of $100.02 in February, volatility has been significant. As of Tuesday, Arm's (ARM.US) stock price rose 0.94% to $257.65; whether it can reclaim and hold above the 50-day moving average as support will be a key determinant of its next move.