SAN FRANCISCO - Arm Holdings shares tumbled after the chip designer gave a lukewarm revenue forecast for the fiscal year, raising concerns that the tech industry’s artificial intelligence (AI) spending spree is slowing.
For fiscal 2025, which ends next March, revenue will be US$3.8 billion (S$5.16 billion) to US$4.1 billion, the company said on May 8. Profit will be US$1.45 to US$1.65 a share. Analysts were predicting revenue of US$4.01 billion – representing a gain of 26 per cent – and a profit of US$1.53 a share.
The shares dropped as much as 10 per cent to US$95.25 in late trading after the report was released. Three months ago, an upbeat forecast sent its shares soaring and helped turn the company into an AI darling on Wall Street. The stock was up 41 per cent in 2024 through the May 8 close.
Arm has an unusual role in the semiconductor industry. It licenses the fundamental set of instructions that software uses to communicate with chips. The company also provides so-called design blocks that companies such as Qualcomm use to build their products.
Arm’s chip designs and licensed standards already serve as critical technology for most smartphones. However, the company’s revenue and profit have not benefited from AI to the same degree as Nvidia’s.
Under chief executive officer Rene Haas, the Britain-based company has attempted to make headway in data centre hardware – where AI demands are spurring major upgrades. As part of that push, Arm is offering more complete technology blueprints to companies such as Amazon.com’s AWS (Amazon Web Services).
In an interview, Mr Haas said Arm remains “very confident in the long-term growth”.
“A lot of the strategies we put in place a couple of years ago are all coming together,” he said.
In the fiscal fourth quarter, which ended in March, revenue was US$928 million. Excluding some items, profit was 36 US cents a share. That compares with average estimates of US$880.4 million and earnings of 30 cents a share. The company’s licensing business grew 60 per cent to US$414 million in the fourth quarter compared with the year-ago period, and its royalty segment jumped 37 per cent to US$514 million.
Arm is still 90 per cent owned by SoftBank Group, which acquired the business in 2016 for US$32 billion. An initial public offering in 2023 raised US$4.9 billion, marking the biggest debut on a US exchange that year. BLOOMBERG, REUTERS
