Arm Disappoints With Weak Outlook Following Earnings Beat

Arm Holdings (ARM) handily topped predictions for its fiscal second quarter on Wednesday but fell short of its forecast for the current quarter. In extended trade, the price of arms decreased.

In the fiscal quarter ended Sept. 30, the Cambridge, U.K.-based firm earned an adjusted 36 cents per share on revenues of $806 million. FactSet polled analysts, who predicted earnings of 26 cents per share on sales of $740 million. Arm's profits climbed 112% year on year, while sales increased 28%.

Arm plans to earn an adjusted 25 cents per share on sales of $760 million in the current quarter. This is based on the midpoint of its forecast. Analysts expected profits per share of 27 cents on sales of $776 million in the fiscal third quarter.

Arm forecasts adjusted profits per share of $1.05 on sales of $3.02 billion for the entire fiscal year 2024. Wall Street expected profits per share of $1.03 on sales of $2.97 billion.

Late Arm Stock Retreat
Arm shares fell 7.6% to 50.26 in after-hours trading today on the stock exchange. Wednesday's regular session saw Arm shares fall 1.6% to settle at 54.40.

"We have seen a significant need for higher-performance CPUs (central processing units) as companies look to capture the increasing demand for artificial intelligence (artificial intelligence), from cloud servers to smartphones to automotive applications," said CEO Rene Haas and CFO Jason Child in a letter to shareholders.

Every major semiconductor manufacturer, including Apple (AAPL), AMD (AMD), Qualcomm (QCOM), Nvidia (NVDA), and many more, uses Arm's chip designs.