ARM (NASDAQ:ARM) Trading 8% Higher on Strong Earnings

ARM Holdings PLC Sponsored ADR (NASDAQ:ARM) shot up 8% on Thursday after the company announced better than expected quarterly earnings. The company traded as high as $268.48 and last traded at $242.8490. Approximately 12,695,921 shares were traded during mid-day trading, an increase of 48% from the average session volume of 8,606,067 shares. The stock had previously closed at $224.89.

The company reported $0.45 earnings per share for the quarter, beating analysts’ consensus estimates of $0.40 by $0.05. The business had revenue of $1.29 billion during the quarter, compared to analysts’ expectations of $1.26 billion. ARM had a return on equity of 12.43% and a net margin of 18.37%.The company’s revenue was up 22.4% on a year-over-year basis. During the same period in the previous year, the firm posted $0.35 earnings per share.

ARM News Summary

Here are the key news stories impacting ARM this week:

• Positive Sentiment: Results exceeded expectations: Fiscal Q1 revenue rose 22.4% year over year to $1.29 billion, topping the approximately $1.26 billion consensus estimate. Adjusted EPS was $0.45 versus expectations of $0.40. ARM Q1 Earnings Call Highlights AI CPU Demand and Data Center Growth
• Positive Sentiment: AI and data-center demand remain powerful growth drivers: Arm reported surging demand for its AI-focused CPU roadmap, while data-center royalty revenue reportedly doubled. Cloud providers’ use of custom chips is supporting licensing and royalty growth. Arm stock jumps as Q1 beats estimates
• Positive Sentiment: Upbeat guidance: ARM issued fiscal Q2 EPS guidance of $0.43–$0.51, above the $0.39 analyst consensus, and forecast revenue above Wall Street expectations. The outlook signals continued customer momentum in AI infrastructure and edge computing. Arm forecasts quarterly revenue above estimates
• Neutral Sentiment: Analyst views are mixed: Needham reaffirmed a Buy rating with a $255 target, while TD Cowen and RBC retained Buy/Outperform ratings but substantially reduced their targets to $350 and $340, respectively. Morgan Stanley maintained Equal Weight and raised its target to $212, below the current trading level.
• Negative Sentiment: Royalty growth and valuation remain risks: Reports indicate fiscal Q2 royalty growth is expected to slow to roughly 13%, partly because of smartphone weakness and memory-price pressure. With ARM trading at a very high earnings multiple, investors remain sensitive to execution and any slowdown in AI-related growth. Memory Prices Hit Arm’s Royalties as Stock Falls

Analysts Set New Price Targets

ARM has been the topic of a number of recent research reports. Sanford C. Bernstein set a $500.00 price target on shares of ARM in a research note on Wednesday, June 17th. Raymond James Financial reissued an “outperform” rating on shares of ARM in a research note on Thursday, May 7th. Morgan Stanley lifted their price objective on shares of ARM from $202.00 to $212.00 and gave the company an “equal weight” rating in a report on Thursday. Guggenheim reaffirmed a “buy” rating and set a $255.00 target price on shares of ARM in a research note on Thursday. Finally, TD Cowen reduced their target price on shares of ARM from $475.00 to $350.00 and set a “buy” rating on the stock in a report on Thursday. Eighteen analysts have rated the stock with a Buy rating, seven have issued a Hold rating and one has given a Sell rating to the company’s stock. According to MarketBeat.com, ARM presently has a consensus rating of “Moderate Buy” and a consensus target price of $286.17.

Insider Buying and Selling at ARM

In other news, insider William Abbey sold 10,887 shares of the business’s stock in a transaction dated Tuesday, May 19th. The stock was sold at an average price of $224.14, for a total transaction of $2,440,212.18. Following the completion of the transaction, the insider directly owned 43,353 shares of the company’s stock, valued at approximately $9,717,141.42. The trade was a 20.07% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which can be accessed through the SEC website. Also, insider Spencer Collins sold 51,961 shares of the firm’s stock in a transaction that occurred on Monday, May 11th. The shares were sold at an average price of $211.73, for a total transaction of $11,001,702.53. Following the completion of the sale, the insider directly owned 51,125 shares in the company, valued at approximately $10,824,696.25. This trade represents a 50.41% decrease in their position. The SEC filing for this sale provides additional information. In the last 90 days, insiders sold 216,049 shares of company stock valued at $52,101,605.

Institutional Investors Weigh In On ARM

Several institutional investors have recently modified their holdings of the company. Amundi raised its stake in ARM by 24.8% in the first quarter. Amundi now owns 11,804 shares of the company’s stock valued at $1,153,000 after buying an additional 2,345 shares in the last quarter. Empowered Funds LLC increased its holdings in shares of ARM by 28.8% in the 1st quarter. Empowered Funds LLC now owns 4,887 shares of the company’s stock valued at $522,000 after acquiring an additional 1,094 shares during the last quarter. Schnieders Capital Management LLC. raised its position in shares of ARM by 9.0% during the 2nd quarter. Schnieders Capital Management LLC. now owns 2,430 shares of the company’s stock worth $393,000 after acquiring an additional 200 shares in the last quarter. Bank of Nova Scotia acquired a new stake in shares of ARM during the 2nd quarter worth about $556,000. Finally, State Street Corp lifted its stake in ARM by 14.7% during the second quarter. State Street Corp now owns 441,445 shares of the company’s stock worth $71,399,000 after purchasing an additional 56,656 shares during the last quarter. 7.53% of the stock is owned by hedge funds and other institutional investors.

ARM Stock Up 8.0%

The stock has a market capitalization of $259.38 billion, a price-to-earnings ratio of 289.11, a P/E/G ratio of 7.61 and a beta of 3.76. The stock has a fifty day moving average of $331.09 and a 200-day moving average of $211.79.

ARM Company Profile

Arm Limited (NASDAQ: ARM) is a global semiconductor IP company best known for designing energy-efficient processor architectures and related technologies that underpin a wide range of computing devices. Founded in 1990 as a joint venture between Acorn Computers, Apple and VLSI Technology and headquartered in Cambridge, England, Arm develops the ARM instruction set architectures and core processor designs that chipmakers license and integrate into custom system-on-chip (SoC) products. The company operates a licensing and royalty business model rather than manufacturing chips itself.

Arm’s product portfolio includes CPU core families (such as Cortex and Neoverse lines), GPU and multimedia IP (Mali), neural processing units (Ethos) and a suite of system and physical IP blocks.