ARM, QCOM, KLAC Stocks Rise Despite Price Target Cuts By UBS Amid Chip Stocks’ Pullback

• Despite the cuts, UBS's revised targets still imply upside for all three stocks from current trading levels.
• The firm lowered Arm's target by more than 20%, though it continues to rate the stock 'Buy.'
• Qualcomm and KLA both retained 'Neutral' ratings following more modest target reductions.

Shares of Arm Holdings (ARM) rose in morning trade on Monday even after UBS lowered its price target on the chip designer, while Qualcomm (QCOM) traded little changed and KLA Corp. (KLAC) posted modest gains following a broader reset of the firm's semiconductor valuations.

ARM’s stock climbed about 2.4% in morning trade, while KLAC’s stock added roughly 1%, and QCOM’s stock was little changed near $171.

UBS lowered its price target on QCOM shares to $190 from $235 and kept a ‘Neutral’ rating, as per a note to investors cited by TheFly. The firm cut KLA Corp's target to $240 from $255, also maintaining a ‘Neutral’ rating on the shares. 

UBS made its steepest cut on ARM’s stock, lowering the target to $360 from $470, though it kept a ‘Buy’ rating on the stock, the only bullish rating among the three.

How Much Upside Do Analysts Still See?

Against UBS's new $190 target, QCOM’s stock has a potential upside of about 11%, well below the stock's average analyst consensus target of $222 as per Koyfin, which points to nearly 30% upside. 

UBS’s price target on KLAC’s shares implies an upside of around 12%, close to the stock's consensus target of $234, which implies about 10% upside. 

Meanwhile, UBS's $360 target for ARM’s stock implies a potential upside of about 32%, comfortably ahead of the stock's consensus target of $304.

Wall Street Still Sees Higher Long-Term Value

The target cuts come after a difficult stretch for semiconductor stocks. The sector has come under pressure in recent weeks following concerns around AI infrastructure spending, despite continued strong demand for advanced chips. 

Even after the recent decline, ARM’s stock has returned around 147% year-to-date; KLAC shares have gained over 76%, while Qualcomm has managed just 1.55%, essentially flat for the year. 

That divergence shows up in valuation too. Arm's forward PEG ratio sits at 3.59 and KLA's at 2.15, both reflecting premium pricing tied to strong momentum, while Qualcomm's price/earnings-to-growth ratio over the next 12 months stands out at 5.99, the richest of the three despite the stock's weak returns.

How Is Retail Feeling About These Stocks?

Retail sentiment on Stockwits around Qualcomm remained ‘bearish’ over the past day, with chatter at ‘low’ levels. KLAC’s shares also saw sentiment trending in the ‘bearish’ zone, though accompanied by chatter at ‘normal’ levels. Sentiment around ARM’s stock sat in ‘neutral’ territory alongside ‘normal’ levels of chatter.

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