Arm Holdings investors are not impressed despite forecast-beating financials
Tonight, some Arm Holdings investors see their glass as half full, with the UK-headquartered micro-chip maker ‘smashing’ Wall Street forecasts but the stock slumped around 8%.
Arm’s forecasts for its new financial year underwhelmed, despite the most recent quarter easily exceeding expectations.
Revenue in Arm’s fourth quarter amounted to $928 million, up from $633 million in the same period last year and comfortably above the $866 million predicted by analysts. Net income for the period totaled $224 million, meanwhile on a per share basis earnings (adjusted) for the quarter came in at 36 cents, versus 30 cents forecast by Wall Street.
Looking to its current quarter, the first three months of its new financial year, Arm told investors it expects to see revenue between $875 million and $925 million, with earnings predicted at 32 to 26 cents per share – which was still upbeat compared to the $857.5 million of revenue that analyst's had forecast.
For the current financial year, however, more cautious guidance of $3.8 billion to $4.1 billion was set for annual revenue, with the bottom end of that range undershooting the market’s consensus of $3.99 billion.
Evidently, the reaction from traders shows just how high hopes have been pinned in the semiconductor sector which has been led by Nvidia and lots of AI-related buzz.
Arm chief executive Rene Haas, in a letter to shareholders, highlighted that the quarterly figures marked the company’s third set of record results in a row following its return to the stock market last year.
He pointed to increasing demand from smartphone, server and automotive customers for the key growth factors, whilst revenue under its licensing model was described as “very strong” and driven by the expansion of AI data centers.
“We believe these fundamental trends will continue and we expect next quarter to also deliver strong year-over-year growth in revenue and profits,” Haas said.
“Arm’s long-term strategy promotes multiple growth drivers.”
In New York, during ‘after hours trading’, Arm shares were down $8.47 or 7.99% changing hands at $97.60.
