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
-
IRA Conversion to Roth: Rules to Convert an IRA or 401(k) to a Roth IRAAn IRA conversion can give you a leg-up in retirement with tax-free income. But proceed with caution.
-
2026 Social Security COLA Projection Dips After Inflation SlowsThis October, the SSA will determine the new cost-of-living-adjustment (COLA) by comparing the CPI-W data from July, August, and September of 2025 to the same data from 2024.
-
The Best REITs to BuyReal estate investment trusts, or REITs, are a special class of stocks that are known for their high dividend yields. Here's how to find the best ones to buy.
-
Stock Market Today: Stocks Enjoy a Fed Day Relief RallyThe question now is whether Jerome Powell and other policymakers can get the balance right given all the new noise.
-
The Free-Lunch Strategy to Reduce Risk From Tech StocksA recent rout in tech stocks has some investors thinking more defensively. This "free-lunch portfolio" strategy can help.
-
Stock Market Today: Stocks Skid Into Another Risk-Off TurnThe promise of the AI revolution can't overcome flickering hopes for a "Fed put."
-
How to Survive Market Mayhem2025 is turning out to be a turbulent year for the market, but don't panic. Here are four ways investors can ride out the storm.
-
Alternative Investments Under Trump: What You Need to KnowAs access to alternative markets opens up, retail investors looking to enhance their long-term financial outcomes have more opportunities to carefully consider.
-
Beware of TV/Billboard Personal Injury Law Firms: Here's WhyIf you or someone you know is tempted to hire a so-called settlement mill to handle a personal injury case, here are some reasons to reconsider.
-
How Small Businesses Can Clear the Economic Hurdles AheadShifting rules on taxes, trade and regulation are creating uncertainty for SMBs. Owners can overcome that by focusing on efficiency, flexibility and investment.
