ARM Replica is an electronic chipboard at a joint ceremony to launch the partnership between Malaysia and ARM Holdings on March 5, 2025 in Kuala Lumpur, Malaysia.
Hari Angara | Nuru Photo | Getty Images
UK-based semiconductor designer shares arm holdings Shares plunged 7.48% in after-hours trading on Wednesday after the company’s licensing revenue fell short of Wall Street expectations.
Arm’s third-quarter fiscal license revenue rose 25% from a year earlier to $505 million, but was 2.9% below the $519.9 million expected by analysts surveyed by FactSet.
Andrew Jackson, an equity analyst at Otus Advisors, said investors were also reacting to Arm’s slightly better-than-expected guidance and the poor outlook from chip design customer Qualcomm.
shares of Qualcomm The stock also plunged 9.68% in after-hours trading on Wednesday. The company’s first quarter results exceeded expectations, but fell short of expectations due to a global memory shortage.
Despite falling short of Wall Street expectations for licensing revenue, Arm posted record quarterly revenue of $1.242 billion in the final three months of 2025, driven by demand for artificial intelligence. This number beats LSEG SmartEstimates, which emphasize more consistently accurate analyst forecasts.
Arm’s chip designs power most smartphones around the world and are increasingly used in AI data centers and edge computing devices.
“While ARM is diversifying into AI chips used in DC/servers, its success remains uncertain and its business model remains heavily dependent on royalties from chips used in consumer products such as mobile phones,” Jackson said.
He added that Arm’s outlook could worsen before it improves if China’s smartphone production declines due to memory shortages.
Qualcomm and Arm executives have suggested smartphone makers may reduce production as supply constraints persist.
Futurum Group analyst Rolf Bulk told CNBC that such a scenario would also put pressure on Arm’s customers. apple And Samsung.
Despite its increased data center exposure, smartphones remain Arm’s largest end market, accounting for about half of its revenue, Bulk said.
Arm shares, which went public in 2023, have also faced broader tech market pressure on earnings and are down 4% since the beginning of the year.
