Arm Holdings (NASDAQ:ARM) reported first-quarter results that exceeded Wall Street expectations for both earnings and revenue, yet the chip designer’s shares continued to slide as investors remained cautious despite an upbeat outlook.
The company posted earnings per share of $0.45 for the quarter, comfortably ahead of the analyst consensus of $0.37. Revenue reached $1.29 billion, surpassing expectations of $1.27 billion.
Despite the earnings beat, Arm shares fell more than 6% in premarket trading on Thursday after already declining 8.11% during the previous regular trading session.
Second-Quarter Guidance Comes in Ahead of Expectations
Looking ahead to the second quarter of fiscal 2027, Arm forecast earnings per share of $0.47, exceeding analysts’ expectations of $0.43.
The company also projected quarterly revenue of $1.38 billion, above the consensus estimate of $1.34 billion, signalling continued confidence in near-term demand.
AI Momentum Continues Despite Smartphone Weakness
Arm said its stronger quarterly performance was supported by ongoing market share gains and higher chip content in artificial intelligence and data centre processors.
These strengths were partially offset by continued softness in the smartphone market, which remained a headwind during the quarter.
Analysts See Long-Term Opportunity but Near-Term Constraints
Bank of America said Arm remains well positioned to benefit from growing demand for agentic CPUs over the longer term. The bank highlighted opportunities across both the company’s intellectual property business, where key CSS products are expected to ramp during fiscal 2027 and 2028, and its emerging AGI chiplet CPU platform.
However, the analysts cautioned that “investor expectations remain high” around both opportunities, and that “overall supply constraints cap any near-term upside.”
Bank of America also reduced its price target on Arm to $260 from $460, citing a “recent re-rating in peer multiple.”