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Arlo Technologies (ARLO) Could Be 43% Undervalued As AI Camera Launch Fuels Debate

Simply Wall St · 2d ago

Arlo Technologies (ARLO) has just rolled out its Essential Solar Security Camera, a solar powered, AI driven device pitched as a low maintenance way to keep homes monitored year round.

Recent trading tells a mixed story for Arlo Technologies. The share price is US$12.15, with the 30 day share price return down 13.89% and the year to date share price return lower by 8.16%. However, the 3 year total shareholder return is up 39.33% and the 5 year total shareholder return is up 88.37%. This points to longer term holders still sitting on sizeable gains despite weaker near term momentum.

Capture the shift toward AI powered home protection by scanning hand picked peers to Arlo Technologies in the 91 AI infrastructure stocks.

Arlo Technologies has pulled back after a strong multi year run, while still trading at 14.6x forward P/E with a sizeable gap to the US$21 analyst price target. Does that point to most of the upside still ahead, or is it already in the rearview mirror?

Most Popular Narrative: 43% Undervalued

The most followed narrative for Arlo Technologies puts fair value at $21.40, well above the last close at $12.15. This frames the recent pullback as a valuation gap rather than just weak sentiment.

Continual migration of subscribers to higher priced AI driven service tiers (Arlo Secure 6) and the corresponding increase in ARPU (now over $15, up 26% y/y) reinforces the long term shift to recurring, high margin (85% non GAAP service margin) subscription revenue, supporting expanding net margins and earnings visibility.

See why 12 investors see Arlo Technologies as 43% undervalued.

Result: Fair Value of $21.40 (UNDERVALUED)

Still, pressure on hardware pricing and heavy dependence on subscription uptake mean that any slowdown in new users or service adoption could quickly challenge that undervalued story.

Find out about the key risks to this Arlo Technologies narrative.

Another View On Arlo Technologies Valuation

On the flip side of that 43% undervalued narrative, Arlo Technologies screens as expensive on earnings. The current P/E of 42.8x sits well above the US Electronic industry at 29.9x, the peer average at 21.7x, and the 19.5x fair ratio that the market could move toward over time. If sentiment cools or growth expectations reset, that gap can turn into valuation risk rather than perceived opportunity.

For investors weighing these competing signals, the key question is whether Arlo Technologies ultimately earns into that premium or whether the multiple drifts closer to the fair ratio.

See what the numbers say about this price — find out in our valuation breakdown.

NYSE:ARLO P/E Ratio as at Oct 2026
NYSE:ARLO P/E Ratio as at Oct 2026

Next Steps

Mixed signals on Arlo Technologies valuation can feel confusing, so move quickly and look at the underlying data yourself before views harden. To see both the potential upside and the key concerns in one place, review the 3 key rewards and 2 important warning signs.

Looking For More Investment Ideas Beyond Arlo Technologies?

If Arlo Technologies has sharpened your focus on where capital really works hardest, do not stop here. Broader opportunities often emerge just outside your current watchlist.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.