Chip designer Arm's shares plunge over 8% after lackluster revenue guidance

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Earnings,Technology,Arm Holdings PLC

Shares of Arm fell over 8% in premarket trading on Thursday as lackluster revenue guidance from the firm clouded a positive sales quarter driven by AI demand.

For full-year 2025, Arm said it expects revenue to come in between $3.8 billion and $4.1 billion, versus analyst expectations of $3.99 billion for the full year, according to LSEG data.fell 8.8% in premarket trading on Thursday, as lackluster revenue guidance clouded a positive sales quarter driven by demand for artificial intelligence applications.Performance was driven by Arm's licensing business, which grew 60% to $414 million in the quarter.

But it was Arm's guidance that left investors unimpressed. For the 2025 fiscal year, Arm said it expects revenue to come in between $3.8 billion and $4.1 billion. Analysts were expecting revenue of $3.99 billion for the full year, according to LSEG data. Citi analysts led by Andrew Gardiner noted that although Arm's results for the fourth quarter beat expectations for the third straight quarter, the full-year guidance midpoint was slightly below consensus."Licensing upside both in F4Q and for FY25, which is being driven by the combination of AI needs and Arm's provision of higher value v9 and Compute Subsystem solutions, is a positive leading indicator for future royalties," they wrote in a note Thursday.

 

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