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Arm: share price falls, outlook considered cautious

( - Arm Holdings is losing ground on the New York Stock Exchange this Thursday, following the publication of quarterly results deemed solid, but the presentation of an annual outlook considered more cautious.

Just over an hour after the Wall Street opening, the chip designer's share price lost 1.8%, while the technology-weighted Nasdaq index advanced by 0.3%.

On Wednesday evening, the British group reported EPS excluding non-recurring items (non-GAAP) of $0.36 for the last three months of its 2023-24 financial year, compared with a profit of $0.02 a year earlier.

At $928 million, revenues were up 47%, a better-than-expected performance, mainly driven by 60% growth in licensing revenues, against a backdrop of increased corporate investment in AI.

Licensing activity saved the quarter, but royalties were penalized by industry and networks", points out one trader.

For its new fiscal year 2024/2025, Arm said it was aiming for annual sales of between 3.8 and 4.1 billion, a target considered disappointing by some investors.

"The median of the target range comes out at 3.95 billion dollars, whereas the consensus was for four billion", point out analysts at Bank of America.

But it's still early in the year, and the management team has shown that it knows how to raise its forecasts in the past", stresses BofA.

The American investment bank is therefore maintaining its buy recommendation and $150 price target on the stock, which it sees as a major beneficiary of the adoption of AI in edge peripheral networks (smartphones, PCs), and even of possible market share gains in servers, to the detriment of AMD and Intel.

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