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
-
Amazon to Display Tariff Charges on Their Product ListingsHow much will tariffs increase Amazon's prices?
-
How Trump's First 100 Days Have Impacted Your PortfolioPresident Trump's first 100 days in office have been busy, with a flurry of executive orders sparking volatility in the stock and bond markets.
-
How Trump's First 100 Days Have Impacted Your Portfolio
President Trump's first 100 days in office have been busy, with a flurry of executive orders sparking volatility in the stock and bond markets.
-
Is It Still Worth It to Gift Savings Bonds?Kiplinger editor explores if it's still a good idea to get savings bonds as gifts for children, looking at their returns and usability.
-
Don't Veer Off Course at the First Sign of a Squall in the MarketsWhen markets go nuts and investor sentiment drops, you can keep your sanity by trusting in and sticking with your long-term plan.
-
How Business Owners Can Prepare for a Terminal DiagnosisThe most important thing is readiness, whether the owner faces a life-changing diagnosis or an employee does.
-
Advisers, Take Note: How 2025 Social Security Changes May Impact Your ClientsWhat financial advisers might need to know to help their clients navigate Social Security in 2025.
-
Stock Market Today: Have We Seen the Bottom for Stocks?Solid first-quarter earnings suggest fundamentals remain solid, and recent price action is encouraging too.
-
Social Security Is Taxable, But There Are WorkaroundsIf you're strategic about your retirement account withdrawals, you can potentially minimize the taxes you'll pay on your Social Security benefits.
-
Serious Medical Diagnosis? Four Financial Steps to TakeA serious medical diagnosis calls for updates of your financial, health care and estate plans as well as open conversations with those who'll fulfill your wishes.
