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
-
RH Fell Short on Earnings But Its Stock Is Up. Here's WhyRH stock is one of the biggest percentage gainers Friday as the home furnishings retailer's upbeat outlook offsets an earnings miss.
-
Is Costco Stock Still a Buy After Earnings?Costco stock is slightly higher Friday after the warehouse club beat expectations for its fiscal first quarter. Here's what Wall Street has to say.
-
RH Fell Short on Earnings But Its Stock Is Up. Here's Why
RH stock is one of the biggest percentage gainers Friday as the home furnishings retailer's upbeat outlook offsets an earnings miss.
-
Is Costco Stock Still a Buy After Earnings?
Costco stock is slightly higher Friday after the warehouse club beat expectations for its fiscal first quarter. Here's what Wall Street has to say.
-
Broadcom Stock Is the Best S&P 500 Stock After EarningsBroadcom stock is soaring Friday after the chipmaker beat earnings expectations for its most recent quarter, fueled by AI demand. Here's what you need to know.
-
Do You Feel Like Somebody’s Watching You? It's Your CarWhat's worse, you gave your vehicle manufacturer permission to watch you — no matter what you're doing. What are the car companies doing with that information?
-
Stock Market Today: Dow Logs Longest Losing Streak Since AprilThe November Producer Price Index showed that inflation remains a tough beast to tame.
-
Why Uber Stock Is Volatile After GM's Cruise AnnouncementUber stock is swinging this week following news that General Motors is restructuring its Cruise unit. Here's what you need to know.
-
Why Adobe Stock Is Down After Its Earnings BeatAdobe stock is lower Thursday despite the tech giant beating expectations for its fiscal 2024 fourth quarter. Here's what you need to know.
-
Three Possible Tax Impacts for Retirees Under TrumpHow might a second Trump term affect your tax bill in retirement — or the inheritance tax bill for your heirs? This pro has three predictions.
