(Bloomberg) -- Arm Holdings Plc shares fell on Monday after Bernstein started coverage on the newly public chip designer with an underperform rating, suggesting it may not be the beneficiary of artificial intelligence that some investors expect.

The stock fell as much as 9.4% to $55.02, below the $56.10 price it opened at following its Thursday initial public offering. However, it pared much of that decline and ended down 4.5% to close at $58. Bernstein’s price target of $46 implies additional weakness.

“While expectations that Arm will be a beneficiary from AI growth may be adding a premium to the share price, we believe it is too soon to declare them an AI winner,” wrote analyst Sara Russo. “With the mobile end market maturing, we think expectations for top line growth are too optimistic.”

Bernstein is only the third firm to start coverage on Arm, and so far ratings are evenly distributed. Aside from Bernstein’s sell-equivalent rating, New Street Research recommends buying the stock while Needham has a hold rating. Needham analyst Charles Shi wrote that the valuation “looks full.”

Read More: Arm Enters a New World for Chip Stocks With IPO

Arm’s Monday decline stood in contrast to the sector overall. The Philadelphia Stock Exchange Semiconductor Index rose 0.5%. Among notable gainers, Advanced Micro Devices Inc. added 0.9% and Lam Research Corp climbed 2%.

Arm, majority owned by SoftBank Group Corp., sold $4.87 billion of shares to the public last week in the year’s biggest IPO.

The Cambridge, UK-based company isn’t a traditional chipmaker. It provides semiconductor designs to tech companies and collects royalties from their use. It also licenses the fundamental technology governing how chips communicate with software.

That means it’s a highly influential company with a foothold at every major technology company in the world. The challenge is turning that clout into greater revenue. “We remain more conservative on their ability to deliver increased royalty rates at the pace management is guiding,” Russo said.

--With assistance from Dawn McCarty.

(Updates to market close.)

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