Arm Holdings (ARM) stock initially fell nearly 8% in early trading Thursday as the chip designer's soft fiscal full-year outlook offset top- and bottom-line beats for its fiscal fourth quarter. The chip stock briefly erased these earlier losses but was last seen back in the red.
In the three months ended March 31, Arm's revenue increased 47% year-over-year to $928 million. Its earnings per share (EPS) improved to 36 cents from 2 cents in the year-ago period.
"We finished our financial year achieving over $3 billion in revenue for the first time, and with strong tailwinds heading into fiscal 2025 as artificial intelligence (AI) is driving increased demand for Arm-based technology across all end markets," Arm CEO Rene Haas said in a statement.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results handily beat analysts' expectations, which had called for revenue of $878.2 million and EPS of 30 cents, as noted in Kiplinger's earnings calendar.
Despite the impressive quarterly results, sentiment toward ARM stock turned negative when the company provided its revenue outlook for the 2025 fiscal year. Arm anticipates revenue in the range of $3.8 billion to $4.1 billion. The midpoint of this range is $3.95 billion, which is below the $3.99 billion in revenue analysts are expecting for the fiscal year.
"I wanted to make sure we set a target that ties to what we have high confidence in to what we can deliver," Jason Child, chief financial officer at Arm, told Reuters.
Arm also provided its EPS outlook for fiscal 2025, calling for a range of $1.45 to $1.65, which satisfied Wall Street's expectations of $1.54.
"From cloud to edge, all AI software models, from GPT to Llama, rely and run on the Arm compute platform,” Haas said. “As these models become larger and smarter, their requirements for more compute with greater power efficiency can only be realized through Arm."
Is Arm stock a buy, sell or hold?
Arm's share price has surged since the company's mid-September initial public offering (IPO), up nearly 67% through the May 8 close. Analysts see more upside for the shares moving forward too.
According to S&P Global Market Intelligence, the consensus analyst target price for ARM stock is $111.85, representing implied upside of about 8% to current levels. Meanwhile, the consensus recommendation on the tech stock is Buy.
Related Content
-
Heirs Inheriting Crypto? Don't Make It a Headache for ThemIf you have cryptocurrency in your estate, you'll need meticulous plans and clear instructions to ensure beneficiaries don't lose out after you're gone.
-
DIY Retirement Planning: A Smart Move or a Risky Endeavor?You can cut the cost of retirement planning by doing it yourself. But for something this important, it might be wiser to call in the professionals.
-
Galentine's Day: A Time to Promote Financial Literacy Among FriendsHere are three things women can do to help their friends gain financial knowledge and confidence.
-
Stock Market Today: Markets Turn Lower on Nasty Inflation SurpriseEquities sold off after a hot reading on consumer price inflation pushed back rate cuts to autumn or year-end.
-
CPI Report Puts the Kibosh on Rate Cuts: What the Experts Are Saying About InflationCPI Consumer price inflation reared its ugly head to start the year, dashing hopes for the Fed to lower borrowing costs anytime soon.
-
These Two Issues Are Critical to Efficient Retirement PlanningYou're saving hard for retirement, but if you're not thinking ahead about taxes and the cost of health care, your savings — and your legacy — could be at risk.
-
How to Use Good Debt (While Identifying and Avoiding Bad Debt)Not all debt is bad, but knowing the difference between good debt and bad debt and how to use them can help you get ahead financially and stay ahead.
-
Stock Market Today: Markets Reflect Elevated UncertaintyInvestors and traders as well as CEOs and central bankers continue to adjust to a new administration in Washington, D.C.
