📉 Arm Holdings: solid results, but a more cautious outlook knocked the stock down 6%!

UK chip technology provider Arm Holdings $ARM posted strong third-quarter 2024 numbers on Wednesday . Revenue rose by 19 % to $983 million, beating analysts' expectations. Still, the company narrowed its full-year forecast for revenue and earnings per share, leading the stock to fall more than 6 %.

🔍 Key numbers:

Fiscal Q3 revenue: $983 million (+19% YoY, above expectations of $946.7 million)

Earnings per share: 39 cents (vs. 34 cents expected)

New revenue guidance: $3.94 billion to $4.04 billion (previously $3.8 billion to $4.1 billion)

Q4 revenue guidance: $1.18 billion to $1.28 billion

📌 Arm benefits from AI, but not as directly as Nvidia
Arm has more than doubled in value since going public in 2023 as investors have bet on its share of the growing AI market. Unlike companies like Nvidia $NVDA, Arm doesn't make its own AI chips - instead it gets royalties on its technology used by other chipmakers.

New designs Armv9, that power, for example, the latest generation iPhones, bring higher licensing rates, which should positively impact future revenues. Each new iteration of the device means a further increase in licensing prices.

🏦 Uncertainty around royalties and Qualcomm
In December, Arm failed in a lawsuit with Qualcomm $QCOM where it tried to challenge Qualcomm of using their licenses without paying a fee.

While the strategic partnership with SoftBank, Oracle and other AI infrastructure players strengthens the position Arm in the market. The issue of licensing fees and competition in the x86 (Intel, AMD) chips remains open.

Arm delivered strong numbers, but more aggressive growth was expected.

How do you see the future of Arm Holdings?