ARM (NASDAQ:ARM) Posts Earnings Results, Beats Estimates By $0.05 EPS

ARM (NASDAQ:ARM) issued its quarterly earnings data on Wednesday. The company reported $0.45 EPS for the quarter, beating the consensus estimate of $0.40 by $0.05, FiscalAI reports. The firm had revenue of $1.29 billion during the quarter, compared to analyst estimates of $1.26 billion. ARM had a return on equity of 12.56% and a net margin of 20.25%.The business’s revenue for the quarter was up 22.4% compared to the same quarter last year. During the same quarter in the prior year, the business posted $0.35 EPS. ARM updated its Q2 2027 guidance to 0.430-0.510 EPS.

Here are the key takeaways from ARM’s conference call:

• Record Q1 results: Revenue rose 22% year over year to $1.29 billion, while licensing and royalty revenue both reached records; non-GAAP EPS of $0.45 exceeded the high end of guidance.
• Accelerating data-center momentum: Data-center royalty revenue more than doubled again, supported by deployments from major hyperscalers and growing adoption of Arm Neoverse CPUs, whose cumulative shipments have surpassed 1.5 billion cores.
• Arm AGI CPU demand is strengthening: Demand for the new CPU now exceeds $2 billion versus the initially secured $1 billion opportunity for fiscal 2027–2028, and management’s confidence in exceeding $1 billion has increased as additional manufacturing capacity is secured.
• Smartphone market weakness is pressuring royalties: Higher memory prices are weighing on handset demand across more market segments, leading management to reduce its royalty-growth expectation for the year from roughly 20% to the high teens, although cloud AI growth is helping offset the impact.
• Continued investment and near-term guidance: Operating expenses are rising as Arm expands engineering efforts for next-generation architectures and AGI CPUs; Q2 revenue is guided to $1.38 billion at the midpoint, with royalty growth in the low teens and licensing growth of about 30%.

ARM Trading Up 1.5%

Shares of ARM stock traded up $3.57 during mid-day trading on Friday, reaching $245.11. The stock had a trading volume of 4,983,847 shares, compared to its average volume of 8,580,373. ARM has a 1-year low of $100.02 and a 1-year high of $452.70. The firm has a market cap of $261.80 billion, a price-to-earnings ratio of 253.77, a PEG ratio of 6.99 and a beta of 3.76. The business’s fifty day moving average is $329.98 and its 200-day moving average is $212.71.

Insider Transactions at ARM

In related news, CFO Jason Child sold 31,920 shares of the company’s stock in a transaction that occurred on Wednesday, May 20th. The stock was sold at an average price of $226.54, for a total value of $7,231,156.80. Following the sale, the chief financial officer owned 174,232 shares in the company, valued at $39,470,517.28. This represents a 15.48% decrease in their ownership of the stock. The sale was disclosed in a filing with the Securities & Exchange Commission, which is available at this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider William Abbey sold 6,566 shares of the stock in a transaction that occurred on Monday, June 1st. The stock was sold at an average price of $402.72, for a total transaction of $2,644,259.52. Following the completion of the transaction, the insider owned 20,563 shares in the company, valued at approximately $8,281,131.36. This trade represents a 24.20% decrease in their position. The SEC filing for this sale provides additional information. Over the last three months, insiders sold 216,049 shares of company stock worth $52,101,605.

Institutional Trading of ARM

Hedge funds and other institutional investors have recently made changes to their positions in the business. Schnieders Capital Management LLC. grew its position in ARM by 9.0% during the 2nd quarter. Schnieders Capital Management LLC. now owns 2,430 shares of the company’s stock worth $393,000 after purchasing an additional 200 shares during the period. Brooklyn Investment Group raised its stake in shares of ARM by 109.1% during the 3rd quarter. Brooklyn Investment Group now owns 2,444 shares of the company’s stock valued at $346,000 after buying an additional 1,275 shares during the last quarter. Integrated Advisors Network LLC lifted its holdings in shares of ARM by 54.0% in the 4th quarter. Integrated Advisors Network LLC now owns 2,683 shares of the company’s stock valued at $293,000 after buying an additional 941 shares during the period. Moors & Cabot Inc. lifted its holdings in shares of ARM by 5.3% in the 3rd quarter. Moors & Cabot Inc. now owns 2,050 shares of the company’s stock valued at $290,000 after buying an additional 103 shares during the period. Finally, Strong Retirement Solutions LLC purchased a new stake in shares of ARM in the fourth quarter worth about $289,000. Institutional investors and hedge funds own 7.53% of the company’s stock.

Analyst Upgrades and Downgrades

Several research analysts recently issued reports on the company. Royal Bank Of Canada reduced their target price on ARM from $475.00 to $340.00 and set an “outperform” rating on the stock in a research report on Thursday. Sanford C. Bernstein set a $500.00 price target on ARM in a research note on Wednesday, June 17th. HSBC downgraded shares of ARM from a “buy” rating to a “hold” rating and upped their price objective for the company from $255.00 to $315.00 in a report on Tuesday, July 14th. Jefferies Financial Group reaffirmed a “buy” rating and issued a $320.00 price objective on shares of ARM in a research report on Monday, July 20th. Finally, Benchmark began coverage on shares of ARM in a research report on Thursday, July 16th. They set a “hold” rating on the stock. Eighteen analysts have rated the stock with a Buy rating, seven have assigned a Hold rating and one has assigned a Sell rating to the stock. Based on data from MarketBeat.com, ARM presently has a consensus rating of “Moderate Buy” and a consensus price target of $285.33.

Key ARM News

Here are the key news stories impacting ARM this week:

• Positive Sentiment: Results exceeded expectations: Fiscal Q1 revenue rose 22.4% year over year to $1.29 billion, above the roughly $1.26 billion consensus, while adjusted EPS of $0.45 beat estimates of $0.40. Management also issued fiscal Q2 EPS guidance of $0.43-$0.51, above the $0.39 analyst consensus. Arm forecasts quarterly revenue above estimates on AI-driven chip demand
• Positive Sentiment: AI and data-center demand remain the main catalyst: Arm cited rising demand for AI CPUs, expanding cloud infrastructure and record customer momentum. Data-center royalty revenue reportedly doubled, while demand tied to Arm’s upcoming AGI CPU roadmap has surpassed $2 billion. Investors are watching whether this product can accelerate royalty growth. ARM Q1 Earnings Call Highlights AI CPU Demand and Data Center Growth
• Positive Sentiment: Some analysts remain constructive: Citi reiterated a Buy rating and $300 price target, while TD Cowen maintained Buy with a $350 target. Needham also reaffirmed Buy, although its $255 target implies limited upside from recent levels. Arm remains key AI infrastructure beneficiary despite softer handset outlook
• Neutral Sentiment: The key debate is execution: Arm’s AI exposure spans cloud, edge and automotive markets, but investors need evidence that the AGI CPU launch converts strong bookings and interest into sustained royalty revenue. Supply constraints and the timing of new deployments could create volatility. 1 Key Metric To Watch That Could Send Arm Stock Soaring
• Negative Sentiment: Royalty growth and handset weakness are concerns: Fiscal Q2 royalty growth was guided at about 13%, with smartphone weakness and memory-price pressure weighing on expectations. This prompted some investors to view the otherwise strong report as insufficient. Memory Prices Hit Arm’s Royalties as Stock Falls
• Negative Sentiment: Valuation and target-price reductions limit upside: After a reported 110.5% year-to-date advance, ARM trades at an exceptionally high earnings multiple, leaving little room for disappointment. Rosenblatt cut its target to $250, Morgan Stanley raised its target only to $212 while retaining Equal Weight, and RBC reduced its target to $340. Arm Stock Looks Pricey Yet Strong On AI Growth

About ARM

Arm Limited (NASDAQ: ARM) is a global semiconductor IP company best known for designing energy-efficient processor architectures and related technologies that underpin a wide range of computing devices. Founded in 1990 as a joint venture between Acorn Computers, Apple and VLSI Technology and headquartered in Cambridge, England, Arm develops the ARM instruction set architectures and core processor designs that chipmakers license and integrate into custom system-on-chip (SoC) products. The company operates a licensing and royalty business model rather than manufacturing chips itself.

Arm’s product portfolio includes CPU core families (such as Cortex and Neoverse lines), GPU and multimedia IP (Mali), neural processing units (Ethos) and a suite of system and physical IP blocks.