Why Arm Holdings Stock Was Sliding Today

Key Points

• Arm has historically been a close partner of Nvidia.

• Nvidia is now teaming with Arm rival Intel.

• Arm is moving into chip design, competing directly with Nvidia for the first time.

• 10 stocks we like better than Arm Holdings ›

Shares of Arm Holdings (NASDAQ: ARM) were pulling back on the blockbuster news that Nvidia (NASDAQ: NVDA) had invested $5 billion in Intel (NASDAQ: INTC). While the deal doesn't have direct implications for Arm, Intel is Arm's biggest competitor in CPU architecture, and the deal could signal a shift in the balance of power in the chip sector, as Nvidia, which also owns a stake in Arm, is the most powerful company in the industry and the leader in artificial intelligence (AI).

As of 10:10 a.m. ET, Arm stock was down 4% after trading down as much as 7.4% earlier in the session. Intel spiked 26% on the news, while Nvidia was up 3.1%.

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What the Nvidia/Intel deal means for Arm

Nvidia announced that it will invest $5 billion in Intel and work with the company to develop custom data center and PC products, including on the x86 platform that competes with Arm.

Nvidia has a long history of working with Arm, and in fact tried to buy Arm in 2020, though the deal was blocked by regulators.

It uses Arm's architecture for the Grace CPU superchip, part of the Grace Blackwell superchip, and Nvidia owns 1.1 million shares of Arm, worth about $150 million.

Nvidia has been building a portfolio of AI stocks. Along with Arm and Intel, it also owns stakes in CoreWeave, Nebius, and Applied Digital.

What's next for Arm?

Arm has been working on designing its own chips, moving from a company that licenses its CPU architecture into competition with Nvidia and other chip designers.

That may be another reason for the Nvidia-Intel tie-up, as Nvidia may be seeking ways to get exposure to new markets and adapt to new competition.

For now, the news is worth keeping an eye on for Arm investors, but it seems unlikely to derail its plans. Today's news shows how quickly things can change in the AI sector.

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Jeremy Bowman has positions in Arm Holdings and Nvidia. The Motley Fool has positions in and recommends Intel and Nvidia. The Motley Fool recommends Nebius Group and recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.