arm holdings CEO Rene Haas told CNBC’s Jim Cramer on Wednesday that he is increasingly confident the company can meet Wall Street’s high revenue expectations for a new data center chip called AGI CPU.
“We feel good. We feel really good,” Haas said on “Mad Money” from San Francisco.
This comment is important because demand wasn’t the main issue surrounding Arm’s first in-house central processing unit for data centers. Instead, investors are watching whether the company can secure enough supply to turn that demand into revenue as chipmakers compete for limited manufacturing capacity amid an artificial intelligence boom.
That execution is especially important because Arm’s CPUs represent a significant expansion of its business model. The company has traditionally made money by licensing its chip designs to customers, but the CPUs represent a push to sell entirely its own chips.
In its May earnings call, Arm first revealed that demand for AGI CPUs was expected to reach $2 billion, double the $1 billion it had projected when it announced its first custom CPUs in March. But shares fell 10% after Arm maintained its official revenue guidance of $1 billion while working to ensure sufficient supply to meet additional demand.
In its July earnings call, management said it had improved confidence in securing needed supplies. Shares rose more than 7% in subsequent trading.
On Wednesday, Haas told Cramer his confidence has grown even more.
“So what we said on the earnings call was that we’re on track to probably hit $2 billion in May, and what we said on the last earnings call was that we’re more confident that we’re going to hit that $2 billion number from May to July,” Haas said. “I go into September and all I can say is, Jim, I’m more confident today than I was in July’s earnings.”
Arm shares have maintained their gains since July’s earnings, but remain about 45% below June’s high of $452 after a parabolic rally in the first half of this year. Kramer’s Charitable Trust previously owned Arm, but sold its position to protect its profits after a massive share price rally. The stock remains on the club’s bullpen watchlist.
