Arm Holdings Stock Jumps 47% Following Strong Q3 Results & Guidance

Shares of Arm (NASDAQ:ARM) experienced a dramatic surge of 47% on Thursday after the company, renowned for its chip design, raised its annual guidance. This update comes as royalty and licensing revenues see a significant boost from the escalating demand for artificial intelligence (AI).

In what is only its second earnings disclosure since its public debut in September, Arm highlighted its anticipation for future growth to be propelled by the increasing need for more energy-efficient computing and AI capabilities.

For its fiscal third quarter, Arm reported adjusted earnings of $0.29 per share, alongside revenue of $824 million. These figures surpassed Wall Street's expectations, which had forecasted an EPS of $0.25 on revenue of $761.6 million.

Looking forward, Arm set its adjusted EPS guidance to between $1.20 and $1.24, with revenue expectations ranging from $3.16 billion to $3.21 billion. This outlook marks an increase from previous forecasts, which anticipated an adjusted EPS between $1 and $1.10, on revenue estimated to be between $2.96 billion and $3.08 billion.

For the current quarter, Arm is predicting an adjusted EPS of $0.28 to $0.32, with projected revenue falling between $850 million and $900 million. These projections notably exceed analyst estimates, which had estimated the EPS at $0.21 on revenue of $780.3 million.