Arm Holdings Price Target Hiked at Rosenblatt, Shares Surge

Arm Holdings (NASDAQ:ARM) shares dropped more than 12% on Wednesday after the company issued a softer-than-expected outlook, even as first-quarter results met expectations.

For the quarter ended June 30, 2025, the chip designer posted adjusted earnings per share of $0.35 on revenue of $1.05 billion, aligning with consensus forecasts of $0.35 and $1.06 billion, respectively.

Royalty revenue increased 25% year-over-year to $585 million, supported by rising adoption of the Armv9 architecture and growing shipments of Compute Subsystems used in data centers, automotive, and mobile applications. AI and edge computing workloads also contributed to the growth.

Looking ahead, Arm guided for fiscal second-quarter adjusted EPS of $0.29 to $0.37, below consensus of $0.35. Revenue is projected between $1.01 billion and $1.11 billion, with the midpoint slightly under Wall Street's $1.07 billion estimate.

Arm Holdings (NASDAQ:ARM) delivered stronger-than-expected third-quarter earnings, but a tightened full-year outlook disappointed investors, sending shares down over 4% in pre-market trading Thursday.

The chip designer reported earnings per share of $0.39, significantly outpacing analysts' expectations of $0.25. Revenue for the quarter also came in stronger than anticipated at $983 million, surpassing the projected $946.8 million.

Despite the robust quarterly results, Arm tempered its expectations for the year ahead. For the fourth quarter, the company forecasts earnings per share between $0.48 and $0.56, in line with analysts' average estimate of $0.53. Revenue is expected to range from $1.175 billion to $1.275 billion, closely matching Wall Street’s projection of $1.23 billion.

Looking at the full year, Arm narrowed its revenue guidance to a range of $3.94 billion to $4.04 billion, tightening its previous estimate of $3.8 billion to $4.1 billion. While the midpoint of the revised range, $3.99 billion, sits slightly above analyst expectations of $3.96 billion, the company no longer expects to hit the higher end of its earlier forecast.

Similarly, the chipmaker refined its full-year earnings per share outlook, adjusting the midpoint to $1.60 from its prior forecast of $1.55. While the revision reflects incremental improvement, the cautious stance on reaching upper-end targets weighed on investor sentiment.

Arm Holdings (NASDAQ:ARM) delivered stronger-than-expected third-quarter earnings, but a tightened full-year outlook disappointed investors, sending shares down over 4% in pre-market trading Thursday.

The chip designer reported earnings per share of $0.39, significantly outpacing analysts' expectations of $0.25. Revenue for the quarter also came in stronger than anticipated at $983 million, surpassing the projected $946.8 million.

Despite the robust quarterly results, Arm tempered its expectations for the year ahead. For the fourth quarter, the company forecasts earnings per share between $0.48 and $0.56, in line with analysts' average estimate of $0.53. Revenue is expected to range from $1.175 billion to $1.275 billion, closely matching Wall Street’s projection of $1.23 billion.

Looking at the full year, Arm narrowed its revenue guidance to a range of $3.94 billion to $4.04 billion, tightening its previous estimate of $3.8 billion to $4.1 billion. While the midpoint of the revised range, $3.99 billion, sits slightly above analyst expectations of $3.96 billion, the company no longer expects to hit the higher end of its earlier forecast.

Similarly, the chipmaker refined its full-year earnings per share outlook, adjusting the midpoint to $1.60 from its prior forecast of $1.55. While the revision reflects incremental improvement, the cautious stance on reaching upper-end targets weighed on investor sentiment.

Chip design leader Arm (NASDAQ:ARM) reported better-than-expected second-quarter earnings, yet its stock declined more than 5% in pre-market today. The company posted adjusted earnings per share of $0.30, outperforming the $0.26 analyst consensus, and revenue reached $844 million, ahead of the expected $744.31 million.

Arm’s revenue saw a 5% year-over-year increase, bolstered by record royalty income and strong licensing momentum. Royalty revenue jumped 23% to $514 million, driven by rising adoption of Armv9 technology and a rebound in the smartphone sector. However, license and other revenue dropped 15% from the prior year to $330 million, attributed to typical variations in the timing and value of major agreements.

Key metrics showed growth with annualized contract value rising 13% year-over-year to $1.253 billion, and remaining performance obligations up 10% from the previous quarter, reaching $2.385 billion.

For the third quarter, Arm projected earnings per share of $0.32 to $0.36 and revenue between $920 million and $970 million, aligning closely with Wall Street expectations at the midpoint.

Chip design leader Arm (NASDAQ:ARM) reported better-than-expected second-quarter earnings, yet its stock declined more than 5% in pre-market today. The company posted adjusted earnings per share of $0.30, outperforming the $0.26 analyst consensus, and revenue reached $844 million, ahead of the expected $744.31 million.

Arm’s revenue saw a 5% year-over-year increase, bolstered by record royalty income and strong licensing momentum. Royalty revenue jumped 23% to $514 million, driven by rising adoption of Armv9 technology and a rebound in the smartphone sector. However, license and other revenue dropped 15% from the prior year to $330 million, attributed to typical variations in the timing and value of major agreements.

Key metrics showed growth with annualized contract value rising 13% year-over-year to $1.253 billion, and remaining performance obligations up 10% from the previous quarter, reaching $2.385 billion.

For the third quarter, Arm projected earnings per share of $0.32 to $0.36 and revenue between $920 million and $970 million, aligning closely with Wall Street expectations at the midpoint.

Arm Holdings (NASDAQ:ARM) shares rose more than 4% intra-day today after Goldman Sachs analysts raised their price target for the company to $143 from $110, while maintaining a Buy rating on the stock.

The analysts expressed increased confidence that Arm will continue to be the preferred architecture for most product categories at the Edge and increasingly in Data Centers. In a world with growing power constraints, they anticipate Arm will gain market share in Server CPUs due to strong momentum with existing customers like AWS (Graviton) and Nvidia (Grace), as well as early success with new customers such as Microsoft (Cobalt) and Google (Axion).

The analysts' positive investment outlook is based on the expected proliferation of Arm-based processors across various cloud platforms and the transition from the v8 to v9 architecture, which involves higher royalty rates. This transition is projected to drive sustained margin expansion and earnings growth.

The analysts forecast a three-year revenue and non-GAAP EPS (excluding SBC) compound annual growth rates (CAGR) of approximately 24% and 30% through 2027, respectively, which significantly exceed the median growth rates within the Semiconductor and Semiconductor Capital Equipment sectors.

On Wednesday, May 29, 2024, CICC initiated coverage on NASDAQ:ARM with a grade of Market Perform, setting a neutral tone for the company's stock outlook. This evaluation came at a time when ARM's stock was priced at $120.65, as highlighted by TheFly. ARM Holdings, known for its semiconductor and software design, plays a crucial role in the tech industry, particularly in the smartphone sector. Its competitors often include other major chip manufacturers and tech companies that are also vying for dominance in the AI and mobile computing space.

ARM Holdings has recently made headlines with its introduction of new chip designs and software tools aimed at boosting the AI capabilities of smartphones. This innovation, coupled with changes in how these technologies are delivered, is expected to hasten their market adoption. Such advancements are critical as they underline ARM's commitment to maintaining its competitive edge in the rapidly evolving tech landscape. This move could potentially influence ARM's market performance and investor sentiment, aligning with CICC's Market Perform rating.

Furthermore, ARM's unveiling of a new computing platform designed to enhance AI functionalities in mobile devices marks a significant stride in the tech industry. This development, aimed at broadening the reach of advanced AI features across a wider array of mobile devices, could revolutionize user experiences and expand device capabilities. This strategic focus on AI could play a pivotal role in ARM's future growth and market position, reflecting the insights behind CICC's analysis.

Despite these promising developments, ARM's stock has experienced a downturn, with a decrease of $4.29 or approximately 3.43%, bringing the stock price to $120.65. This decline occurred within a trading range between $119.05 and $123.7. Over the past year, ARM's shares have fluctuated significantly, with lows of $46.5 and highs of $164. The company's market capitalization stands at roughly $125.52 billion, showcasing its substantial presence in the market despite recent stock price volatility. This financial snapshot provides a broader context to CICC's Market Perform rating, suggesting a cautious optimism towards ARM's stock amidst its innovative strides in AI and mobile computing.