ARM (NASDAQ:ARM) Announces Earnings Results

ARM (NASDAQ:ARM) issued its quarterly earnings results on Wednesday. The company reported $0.52 EPS for the quarter, beating analysts’ consensus estimates of $0.48 by $0.04, FiscalAI reports. ARM had a net margin of 17.13% and a return on equity of 11.86%. The business had revenue of $1.44 billion for the quarter, compared to analysts’ expectations of $1.38 billion. During the same quarter in the prior year, the firm posted $0.39 earnings per share. The business’s quarterly revenue was up 27.1% compared to the same quarter last year.

Here are the key takeaways from ARM’s conference call:

• Arm reported record Q2 revenue of $1.44 billion, up 27% year over year, and non-GAAP EPS of $0.52, up 33%. Q3 revenue guidance is $1.54 billion at the midpoint, representing approximately 24% year-over-year growth.
• License and other revenue rose 50% to a record $773 million, reflecting stronger customer commitments and ATA and CSS agreements. Management views this licensing momentum as a leading indicator of future royalties, though license revenue can vary with deal timing.
• Data center royalties doubled year over year, while Arm’s share at top hyperscalers rose above 50% in calendar 2025; Arm expects it to exceed 60% by the end of 2026. Executives cited growing adoption across major cloud platforms and a shift from x86 as drivers of further growth.
• Demand for the Arm AGI CPU strengthened, with purchase orders from multiple customers and improved confidence in achieving up to $2 billion in revenue across fiscal 2027 and 2028; initial deliveries remain targeted for fiscal Q4 2027. The company is still securing supply, and its first-generation product is expected to have gross margins of 30%–40%.
• Higher memory prices are weighing on smartphone demand and keeping edge AI royalties roughly flat; Arm expects Q3 royalty growth in the low single digits year over year. Management expects smartphone conditions to normalize, but the near-term pressure offsets strength in cloud and physical AI.

ARM Price Performance

Shares of ARM traded up $6.89 during trading hours on Friday, hitting $173.61. The stock had a trading volume of 3,968,998 shares, compared to its average volume of 7,467,451. The firm has a 50 day simple moving average of $254.39 and a 200-day simple moving average of $229.59. The firm has a market capitalization of $185.43 billion, a P/E ratio of 199.36, a price-to-earnings-growth ratio of 5.60 and a beta of 3.93. ARM has a 1-year low of $100.02 and a 1-year high of $452.70.

More ARM News

Here are the key news stories impacting ARM this week:

• Positive Sentiment: Arm has begun selling its own host CPU for AI accelerator systems, positioning the company to benefit as data-center operators expand AI infrastructure. The opportunity could add to its existing chip-design and licensing business. The AI Chip Race Is Changing
• Positive Sentiment: UBS lowered its price target to $270 from $320 but kept a Buy rating, while JPMorgan cut its target to $245 from $255 and maintained Overweight. Both firms remain constructive despite reducing expectations. UBS target update JPMorgan target update
• Neutral Sentiment: Arm’s recent quarterly report showed revenue up 27% year over year to $1.44 billion, ahead of estimates, and data-center royalties more than doubled. These results support the AI-growth thesis, but did not prevent a sharp post-earnings selloff. Arm results and royalty trends
• Negative Sentiment: Investors remain concerned that weaker smartphone royalties and slower growth in recurring royalties may limit how quickly chip shipments translate into revenue. Valuation concerns have also weighed on the shares, even after the earnings beat. Smartphone royalties and AI growth

Analyst Ratings Changes

Several equities research analysts recently commented on the company. Weiss Ratings restated a “hold (c)” rating on shares of ARM in a research report on Thursday, October 15th. HSBC reiterated a “hold” rating and issued a $215.00 target price on shares of ARM in a report on Thursday. Jefferies Financial Group reiterated a “buy” rating and issued a $320.00 target price on shares of ARM in a report on Monday, July 20th. Benchmark assumed coverage on ARM in a research note on Thursday, July 16th. They issued a “hold” rating on the stock. Finally, Barclays cut their price target on ARM from $360.00 to $325.00 and set an “overweight” rating on the stock in a report on Thursday. Nineteen analysts have rated the stock with a Buy rating, seven have issued a Hold rating and one has assigned a Sell rating to the company. According to MarketBeat.com, the stock has a consensus rating of “Moderate Buy” and a consensus target price of $291.72.

Insider Buying and Selling

In related news, CFO Jason Child sold 10,400 shares of the company’s stock in a transaction that occurred on Monday, September 21st. The stock was sold at an average price of $300.00, for a total transaction of $3,120,000.00. Following the transaction, the chief financial officer directly owned 153,442 shares of the company’s stock, valued at approximately $46,032,600. This represents a 6.35% decrease in their position. The transaction was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan.

About ARM

Arm Holdings plc designs and licenses semiconductor technology, including processor architectures and related intellectual property. Rather than manufacturing chips, the company licenses its designs and collects royalties on products that use them.

Arm’s offerings include Cortex CPUs, Mali graphics processors, Neoverse infrastructure platforms and other technology for applications ranging from smartphones and consumer electronics to automotive systems, the Internet of Things and cloud computing.