British semiconductor design firm Arm Holdings (ARM) just got a major vote of confidence as Ray Dalio’s Bridgewater Associates took a sizable stake, signaling strong conviction in the company’s turnaround prospects.
According to SEC fillings, Bridgewater purchased more than 473,000 ARM shares, worth about $76.6 million, during the quarter.
At the same time, the hedge fund exited several Chinese holdings, including e-commerce companies Alibaba (BABA) and JD.com (JD), as well as tech firm Baidu (BAIDU).
Even with Bridgewater’s stake, SoftBank still controls roughly 90% of Arm, having taken the company public in 2023.
Like much of the tech sector, Arm’s second quarter was a tale of two halves: shares tumbled in early April as Trump's tariff war hit semiconductor firms hard before staging a relief rally later in the quarter.
In fact, ARM traded between $80 and $165 over the three-month period.
Despite the roller coaster, Arm shares are back in positive territory for the year, up about 12% year-to-date and more than 20% over the past 12 months.
Bridgewater’s thesis on Arm isn’t public, but the hedge fund’s global macro and systematic approach often leads it to make contrarian bets.
Notably, Dalio has been openly critical of Trump’s tariffs, so Bridgewater’s move into a semiconductor name could signal a view that the worst of the trade hostilities is now in the rearview mirror.
Investors still have questions about Arm Holdings
At first glance, Arm Holdings delivered in line with expectations in its fiscal first quarter, reporting earnings per share of 35 cents on revenue of $1.05 billion.
But the stock slid after the earnings report, weighed down by weaker-than-expected smartphone royalties and a muted outlook for the fiscal second quarter.
Unlike traditional semiconductor companies, Arm doesn’t manufacture chips. It designs and licenses processor architectures, so the shortfall in smartphone royalties was a significant letdown.
CEO Rene Haas told shareholders the company now plans to develop its own chips, a move analysts at Needham called a “major change” that could alter Arm’s cost structure.
Wells Fargo noted the announcement left “investors with more questions than answers.”
That uncertainty fed into a weaker earnings outlook. For the current quarter, Arm projected earnings of 29 to 37 cents per share, with the midpoint coming in below Wall Street expectations.
It was the second straight quarter of disappointing guidance; the previous shortfall was blamed on an uncertain economic environment tied to tariffs.
Your email address will not be published. Required fields are markedmarked