TLDR
- Arm Holdings reported Q3 adjusted earnings of 39 cents per share, beating Wall Street estimates of 33 cents
- Revenue reached $1.135 billion, exceeding analyst expectations of $1.06 billion
- The company guided current quarter revenue to $1.225 billion at midpoint, above the $1.11 billion consensus estimate
- Arm stock rose 6.6% in premarket trading following the earnings announcement
- Bank of America Securities analyst maintains Buy rating with $205 price target, citing strong data center momentum and market share gains
Arm Holdings delivered better-than-expected results for its September quarter. The chip designer reported adjusted earnings per share of 39 cents.
Wall Street had expected 33 cents per share, according to FactSet. Revenue came in at $1.135 billion for the quarter.
Analysts had been looking for $1.06 billion in revenue. The company’s performance topped estimates on both metrics.
Arm Holdings plc American Depositary Shares, ARM
The U.K.-based company also provided guidance that exceeded expectations. Arm said revenue for the current quarter would hit $1.225 billion at the midpoint of its range.
That figure sits above the $1.11 billion average analyst estimate. The strong outlook sent shares higher in premarket trading.
“Arm delivers unmatched performance, efficiency, and software breadth across the full range of AI workloads,” the company stated in its shareholder letter. Arm stock gained 6.6% ahead of Thursday’s opening bell.
Business Model and Technology
Arm makes money by licensing its chip designs to semiconductor companies and smartphone makers. Apple and Qualcomm are among its major customers.
The company’s latest advanced chip technology is called Armv9. This newer technology generates higher royalty rates than the previous Armv8 version.
Arm is also expanding into the high-end cloud server processor market. The company sells chip technology to Microsoft and Nvidia for this segment.
KeyBanc Capital Markets analyst John Vinh maintains an Overweight rating on the stock. He keeps his $190 price target in place.
Vinh said his checks showed solid usage of Arm-based server chips among cloud computing companies. This came from research conducted last week.
Analyst Views and Market Performance
Bank of America Securities analyst Vivek Arya reiterated a Buy rating on Arm Holdings. He set a price target of $205.
Arya pointed to several factors supporting his bullish view. The company beat sales and earnings expectations with strong data center momentum.
SoftBank’s increased contributions also played a role. Arm is gaining market share against x86 competitors.
The company is increasing content per core and expanding the number of cores. These factors are expected to drive future growth.
Arya sees new opportunities in chiplet and silicon design. Potential collaborations with OpenAI and Broadcom could materialize.
The analyst expects Arm to achieve 15-20% growth in sales and earnings per share over the next decade. Global AI infrastructure expansion positions the company as a key beneficiary.
Citi also maintained a Buy rating on the stock. The firm set a $200 price target.
Arm stock is up 30% this year through Wednesday’s close. The iShares Semiconductor ETF gained 42% over the same period.
The stock has underperformed the broader semiconductor sector slightly. However, the recent earnings beat and strong guidance suggest the company is executing well on its growth strategy.
The post Arm Holdings (ARM) Stock: Rises As Chip Designer Beats Estimates On Strong AI Demand appeared first on Blockonomi.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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