Arm Holdings reported first-quarter earnings per share of $0.45, topping analysts' consensus of $0.37. The chip designer also posted revenue of $1.29 billion for the quarter, ahead of the $1.27 billion estimate.
Despite the stronger-than-expected results, Arm's shares moved lower in extended trading, sliding more than 6% in the premarket. The stock had already fallen 8.11% during the regular session earlier in the day.
For the second quarter of fiscal 2027, Arm issued guidance calling for EPS of $0.47, above the analyst consensus of $0.43. The company forecast revenue of $1.38 billion for the period, compared with a consensus estimate of $1.34 billion.
Company executives attributed the quarterly outperformance to continued gains in share and content for AI and data center chips, although those positives were partially offset by near-term weakness in the smartphone market.
Analyst reaction and outlook
Bank of America analysts noted that Arm is well positioned over the long term to capture demand for agentic CPUs. Their view points to both Arm's intellectual property business - where key CSS products are expected to ramp in fiscal 2027-28 and to deliver increasing content per core over time - and the firm's new AGI chiplet CPUs.
At the same time, the analysts cautioned that investor expectations remain high around these opportunities and that overall supply constraints cap any near-term upside. In light of a recent re-rating in the peer group, Bank of America reduced its price target on Arm to $260 from $460.
What this means for markets
- Arm's quarterly figures demonstrate momentum in AI and data center chip content, which supports demand-side narratives in semiconductors and related cloud hardware purchasing.
- Near-term smartphone weakness is acting as a counterweight, tempering immediate upside despite stronger IP and data center performance.
- Analyst downgrades and investor caution amid supply constraints are weighing on the stock even after the company beat near-term estimates.
Vahid Karaahmetovic contributed to this report.