Arm Stock Drops Despite Record Q4 Revenue as Weak Outlook Disappoints

Arm Stock Drops Despite Record Q4 Revenue as Weak Outlook Disappoints

Shares of Arm Holdings (ARM) fell about 9% in after-hours trading on Wednesday after the company issued a weaker-than-expected outlook for its upcoming quarter.

The chip designer, known for its partnership with Nvidia (NVDA), expects fiscal Q1 adjusted earnings of 30 to 38 cents per share, missing analysts’ forecast of 41 cents, according to Visible Alpha. Its revenue guidance of $1 billion to $1.1 billion also came in below expectations at the midpoint.

Despite the downbeat outlook, Arm reported a strong fiscal Q4, posting record revenue of $1.24 billion, up 34% year-over-year and ahead of analyst estimates. Adjusted net income rose to $584 million (55 cents per share), up from $376 million (36 cents per share) the previous year.

Royalty revenue climbed 18% to $607 million, while license and other revenue surged 53% to $634 million.

Still, investor focus remained on the conservative guidance, weighing on sentiment. Arm shares are now up less than 1% year-to-date as of Wednesday’s close.