Chip designer Arm Holdings on Wednesday reported a stronger-than-expected 39% surge in quarterly revenue, and forecast fiscal second-quarter sales broadly in line with Wall Street estimates, yet its shares fell about 9% in extended trading.
According to LSEG, Arm’s second-quarter revenue is expected to range between $780m (USD) and $830m (USD), compared to an analyst average estimate of $804.1m.
Jason Child, chief financial officer at Reuters, stated that “we’re seeing more investments [in artificial intelligence] compared to 90 days ago.”
Arm’s revenue for the first quarter increased 39%, to $939m. This was higher than analyst expectations of $902.7m.
The UK chip designer announced first-quarter earnings per share of 40 cents, after stock-based compensation and other factors. Analysts had expected earnings to be 34 cents per share.
Arm makes money from licensing fees and royalties for the semiconductor designs it creates.
Arm designs are used in nearly all smartphones in the world. The company is also trying to gain a foothold in other markets, such as data centers. According to TD Cowen research, chips with Arm technology bring in $200bn a yearly revenue for chipmakers who sell them.
The recent price of Arm’s shares has nearly tripled since its initial public offer last September. This gives it a market value of around $140bn. According to LSEG, the shares traded recently at about 75 times expected earnings compared with around 31 times earnings of the heavyweight chipmaker Nvidia.
Arm’s designs can be found next to AI chips, but the company has not seen the same revenue or profit as Nvidia.
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