52 Hedge Funds Back This Semiconductor Stock – What’s the Catch? Noor Ul Ain Rehman Sat, November 14, 2026 at 10:28 AM EST 3 min read ARM -6.40% ^GSPC -0.40% Trade ARM on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
We just published the list of the 10 High P/E Stocks Under the 200-Day SMA and Arm Holdings plc (ARM) takes the 10th place on our list.
A high price-to-earnings ratio usually reflects substantial expectations for a company's future earnings. But what happens when those expectations remain elevated even as the stock falls below its long-term trading average? That disconnect has become particularly relevant following the recent technology selloff, which has pressured several companies with strong growth prospects but demanding valuations.
The retreat has been especially visible in stocks exposed to artificial intelligence and semiconductor spending. Reuters reported on November 9 that a "month-long swoon" in technology and AI-related stocks in the week ended with the biggest one-day drop for the S&P 500 technology sector in more than six years.
The primary concern for investors is the Democratic victories in the midterm elections, which may lead to sluggish data-center spending, which makes up the center of the market rally. In other news, we compiled a list of the 10 Best Healthcare and Insurance Stocks To Buy Following the 2026 Democratic Midterm Sweep. Access the complete list here for free.
The 200-day simple moving average provides another perspective on these developments. By averaging a stock's closing prices over approximately 200 trading sessions, the indicator helps investors assess its longer-term price trend. A stock trading below this level may be experiencing sustained selling pressure, although the technical signal alone says little about whether its underlying business is undervalued.
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This holds significance for investors when examining companies with elevated trailing P/E ratios. Some are established businesses generating substantial cash flow, while others have earnings that remain small relative to their market valuations. In both cases, a decline below the 200-day moving average does not necessarily make the stock inexpensive.
Arm Holdings plc (ARM) made our list of the 10 High P/E Stocks Under the 200-Day SMA for two reasons. First, ARM has a trailing P/E of 200.71 as of writing this article. Second, 52 hedge funds are bullish on the stock, making ARM a very popular stock in this space.
Arm Holdings plc (NASDAQ:ARM) has built its semiconductor business around licensing processor technology and collecting royalties from chips using its designs. The company is now expanding into supplying its own designed silicon products, including the Arm AGI CPU, as it increases its exposure to data-center computing.
One important development is Arm's expansion beyond its traditional intellectual property business into purpose-built silicon. In its second-quarter fiscal 2027 results, the company reported year-over-year revenue growth of 27% to $1.44 billion, with licensing and other revenue increasing 50% to $773 million. However, royalty revenue grew only 8%, illustrating the difference between securing new licensing agreements and generating revenue from chips subsequently shipped by customers. Also read our meticulously crafted list of the best stocks to retire on.
Arm's data center business represents an important source of growth. Management reported that data center royalties doubled year over year, while planned customer commitments for its new Arm AGI CPU extend into 2027.
The company is also investing heavily in research and development to support its expanding technology portfolio. With a substantial valuation attached to its future earnings, the timing and profitability of new silicon products matter alongside continued licensing growth.
Access the complete list of the 10 High P/E Stocks Under the 200-Day SMA here for free.
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This article was originally published at Insider Monkey.
