Arm Shares Drop After Hours Despite Stronger-Than-Expected Revenue Forecast
Despite forecasting second-quarter revenue above Wall Street estimates, Arm Holdings saw its shares fall nearly 7% after hours on Wednesday. The decline came as the company warned of a potential drop in smartphone royalties for the next quarter. CEO Rene Haas highlighted strong demand from AI and data center CPUs but noted challenges with memory shortages affecting royalty growth. Arm reported first-quarter revenue of $1.29 billion, exceeding expectations, driven by increased licensing and royalty income due to rising complexity in chips used in cloud computing. The company has shipped 1.5 billion Arm cores for the data center over six years, with a significant portion delivered recently as demand accelerates. Arm's new AGI CPU is gaining traction, with Oracle among its customers and projected sales reaching $2 billion across fiscal years 2027-2028. Jefferies analysts expect even higher sales of up to $18 billion by 2031.
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