Chip tech provider Arm narrows full-year forecast, stock falls
SAN FRANCISCO (Reuters) – Chip tech provider Arm Holdings said on Wednesday it will no longer meet the top end of its previous full-year guidance, but slightly topped Wall Street’s current-quarter expectations.
Arm shares slumped about 6% in extended trading after the report.
Since Arm went public in 2023, it has more than tripled its market value as investors bet it would see a significant share of the artificial intelligence boom that propelled Nvidia to become the world’s most valuable company.
But Arm does not typically enjoy growth spurts in boom times because it makes more money by steadily raising licensing fees for its technology and royalties for each chip sold.
For the full year, Arm narrowed its revenue guidance to a range of $3.94 billion to $4.04 billion from $3.8 billion to $4.1 billion. The company also narrowed its adjusted earnings per share guidance for the full year.
Investors were expecting Arm to raise its full-year outlook with the adoption of its chip designs for AI servers, and with increased use of its higher royalty rate Armv9 design for smartphones, Summit Insights Group analyst Kinngai Chan said.
CEO Rene Haas said the company’s narrowed full-year guidance was the result of being close to the end of the fiscal year. The prior guidance had not changed for some time, he said.
As much as is it displeases me that every week seems to be ‘let’s rag on Intel’ week, it’s hard not to keep bringing up the company’s utter failure to bring its manufacturing up to scratch when big dogs like Bill Gates keep talking about it. At least Gates isn’t ragging—he’s offering a sombre lament.
Speaking to the Associated Press, ex-Microsoft co-founder and multi-billionaire Bill Gates says he is “stunned that Intel basically lost its way”, referring of course to the numerous ways that Intel’s design and fabrication divisions have gone wrong.
Gates sums up Intel’s general problem better than I can:
[Intel is] kind of behind in terms of chip design and they are kind of behind in chip fabrication. And both of those are very capital intensive. They missed the AI chip revolution, and with their fabrication capabilities, they don’t even use standards that people like Nvidia and Qualcomm find easy.
Pat Gelsinger returned to Intel as CEO to lead the charge of its attempted recovery back in 2021, but after apparent failure, he retired late last year.
Gates explains:
I thought Pat Gelsinger was very brave to say, ‘No, I am going to fix the design side, I am going to fix the fab side.’ I was hoping for his sake, for the country’s sake that he would be successful. I hope Intel recovers, but it looks pretty tough for them at this stage.
Speaking about the “country’s sake” might be hyperbole, but there’s also an air of truth to it given that Intel is the United States’ only large-scale advanced chip manufacturer. TSMC has been lured over with its Arizona fab, but that’s still a Taiwanese company.
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Chip tech provider Arm narrows full-year forecast, stock falls, Source
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