Arm Holdings beats sales forecasts as AI fuels demand

Arm Holdings beat quarterly sales expectations as more companies used its latest advanced chip technology to meet the demand for artificial intelligence innovations.
The company, based in Cambridge and listed on the Nasdaq stock exchange in New York last year by SoftBank, the Japanese technology investor, reported second-quarter revenue of $844 million, ahead of consensus analyst estimates of $810 million. Net income rose to $107 million from a loss of $110 million in the same period last year.
Arm derives revenue from licensing fees for its chip designs and collects a royalty for each chip sold that uses its technology. The company is rolling out its V9 chip design, which generates higher royalty payments than its earlier technology. Apple is using V9 chips to power the iPhone16.
The V9 technology represented 25 per cent of Arm’s revenue for the fiscal second quarter, and its use in smartphones assisted the company’s revenue growth.
Rene Haas, chief executive of Arm, said that demand for its latest technology “continues to exceed expectations, and to accelerate our licensing and royalty revenue growth.
“AI everywhere is generating new opportunities for the Arm compute platform.”
Arm’s shares fell $2.68, or 1.9 per cent, to $144.68 in after-hours trading after the company’s revenue forecast for the third quarter met analyst expectations. It expects revenue in a range between $920 million and $970 million, with a midpoint of $945 million, compared with an average analyst estimate of $944.3 million, according to data from the London Stock Exchange Group.
Arm previously had a primary listing on the exchange and was a constituent of the FTSE 100 index with a secondary listing on Nasdaq.
SoftBank made an agreed offer for Arm in July 2016, valuing its target at £24.3 billion. The transaction was completed three months later. A planned takeover deal by Nvidia, announced in 2020, collapsed in February 2022, with SoftBank subsequently opting to pursue an initial public offering in September last year on Nasdaq, valuing Arm at $54.5 billion.
Bets that Arm will benefit from a surge in AI computing have more than doubled the chip designer’s share price since the IPO, giving it a market value of $151 billion.