Arm Stock Sinks as Soft Outlook Offsets AI-Fueled Earnings Beat
Arm Holdings stock is deep in the red Thursday after the chipmaker's full-year outlook fell short of Wall Street's expectations. Here's what you need to know.


Arm Holdings (ARM) stock is down plunging Thursday as the chipmaker's weak guidance offsets a fiscal first-quarter top- and bottom-line beat.
In the three months ended June 30, Arm's revenue increased 39.1% year-over-year to $939 million. Its earnings per share (EPS) rose 66.7% from the year-ago period to 40 cents.
"Artificial intelligence (AI) demand and rising compute subsystems (CSS) adoption across major market segments drove record revenue," said Arm CEO Rene Haas in a statement. "As the energy needs of AI continue to escalate, so does the demand for the high-performance, power-efficient Arm compute platform."

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 company's results handily beat analysts' expectations. Wall Street was anticipating revenue of $902.7 million and earnings of 34 cents per share, according to CNBC.
However, sentiment turned negative toward the semiconductor stock when Arm reiterated its full-year outlook, calling for revenue in the range of $3.8 billion to $4.1 billion and EPS in the range of $1.45 to $1.65. The midpoint of these ranges, $3.95 billion in revenue and earnings of $1.55 per share, is short of analysts' expectations of $4 billion in revenue and earnings of $1.58 per share.
Arm also provided an outlook for its fiscal second quarter. The chipmaker anticipates revenue to arrive between $780 million to $830 million and earnings per share in the range of 23 cents to 27 cents. The midpoint of these ranges, $805 million in revenue and earnings of 25 cents per share, are mixed versus the $804.1 million in revenue and earnings of 27 cents per share that Wall Street is anticipating.
In an update to its reporting process, the company announced that it will no longer disclose the number of Arm-based chips reported as shipped.
"We previously considered the number of chips reported as shipped by our customers as a key performance indicator because it represented the acceptance of our products by companies who use chips in their products," Arm said. "As we shift our focus to higher-value, lower-volume markets such as data center servers, AI accelerators and smartphone applications processors, the number of chips reported as shipped is less representative of our performance as the growth in royalty revenue is concentrated in a smaller number of chips."
Is Arm Holdings stock a buy, sell or hold?
Arm Holdings has been one of the best stocks on the price charts this year, up more than 60%. And Wall Street is generally bullish toward the chipmaker, which went public in September 2023 in one of the biggest IPOs in U.S. history.
According to S&P Global Market Intelligence, the average analyst target price for ARM stock is $129.81, representing implied upside of about 6% to current levels. Meanwhile, the consensus recommendation on the tech stock is Buy.
But some analysts think the stock is pricey after its run higher. Financial services firm Needham, for instance, has a Hold rating on ARM because of its valuation.
While the company reported solid first-quarter results, this was the first print in which it did not raise its outlook, Needham analyst Charles Shi said in a note this morning. "The lack of upside could be seen as a negative for the stock that trades at a sky-high valuation."
So despite Arm being "a solid business with great growth potential, we remain on the sidelines based on valuation," Shi concluded.
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.
-
Stock Market Today: Stocks Skid Into Another Risk-Off Turn
The promise of the AI revolution can't overcome flickering hopes for a "Fed put."
By David Dittman Published
-
With DOGE Making Cuts at National Parks, Can You Still Use Your Senior Pass?
If you are a U.S. citizen or permanent resident 62 or older, you can still use your Senior Pass at any and all National Parks in the U.S. Here's what the Senior Pass is and how to use it.
By Kathryn Pomroy Published
-
Stock Market Today: Stocks Skid Into Another Risk-Off Turn
The promise of the AI revolution can't overcome flickering hopes for a "Fed put."
By David Dittman Published
-
How to Survive Market Mayhem
2025 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.
By Jeffrey R. Kosnett Published
-
Alternative Investments Under Trump: What You Need to Know
As access to alternative markets opens up, retail investors looking to enhance their long-term financial outcomes have more opportunities to carefully consider.
By Henry Yoshida Published
-
Beware of TV/Billboard Personal Injury Law Firms: Here's Why
If 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.
By H. Dennis Beaver, Esq. Published
-
How Small Businesses Can Clear the Economic Hurdles Ahead
Shifting rules on taxes, trade and regulation are creating uncertainty for SMBs. Owners can overcome that by focusing on efficiency, flexibility and investment.
By Mark Valentino Published
-
Stock Market Today: Dow Adds 353 Points Despite Soft Retail Sales
Investors and traders shake off another set of shaky economic numbers and send 10 of 11 sectors higher on Monday.
By David Dittman Published
-
CoreWeave IPO: Should You Buy CRWV Stock?
The CoreWeave IPO will mark the biggest public offering of the year, with the AI cloud company expected to start trading on the Nasdaq in late March.
By Karee Venema Published
-
Nvidia Stock's Been Growing for Years. Just Look At Its 100,000% Return
Nvidia shareholders have had to stomach intense volatility over the years, but they have come out on top thanks to the AI chipmaker's bellwether status.
By Louis Navellier Published