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Shares in Arm fell as much as 10 percent after the U.K. chip designer issued lower revenue estimates for the coming year, fueling concerns that tech companies may slow spending on artificial intelligence hardware. can.
The SoftBank-backed group, which has been one of the biggest beneficiaries of a surge in AI spending since listing on the Nasdaq in September, has forecast revenue of between $3.8bn and $4.1bn for the year to March 2025. is predicted. Analysts had expected revenue of $4.01bn. .
Share prices fell in after-hours trading Wednesday after Arm reported a 47 percent jump in fourth-quarter revenue to $928 million. It pushed annual revenue above $3bn for the first time and exceeded its guidance of between $850mn and $900mn.
The results are the third largest after Arm's blockbuster IPO, which valued it at $65 billion and was the largest U.S. listing in nearly two years. Its market capitalization has risen since then, reaching a peak of nearly $117 billion in February. It had a market value of $109bn before the earnings announcement on Wednesday.
As AI software models, such as OpenAI's ChatGPT and Meta's Llama, “get bigger and smarter, their needs for more computing with greater power efficiency will be met by ARM,” said chief executive Rene Haas. can”.
In a call with shareholders, Haas said: “AI tailwind has provided unprecedented growth for our business. The company's growth and outlook couldn't be brighter. It's a great addition to its smartphones and infrastructure business.” He cited accelerating revenue from royalties for the latest chip designs, as well as increased demand for chips that power data centers and autonomous vehicles.
Chief Financial Officer Jason Child said Arm expects total revenue to grow at least 20 percent annually in fiscal 2026 and 2027.
Revenue in the latest quarter was boosted by an increase in royalties for its V9 chip designs, which are licensed to power smartphones, data centers and AI chips made by companies including Nvidia and Amazon to run major language models. are Arm sells chip design licenses to manufacturers who pay royalties on each unit shipped. Royalty revenue rose 37 percent to $514 million in the quarter. Arm said chips based on its V9 technology now account for a fifth of its royalty revenue, up from 15 percent in the previous quarter.
Arm revised its revenue guidance for the fourth quarter in February due to increased demand for new AI applications that drove higher demand for its chip architecture.
Shares of AI chip makers such as Nvidia and AMD have rallied this year as the tech companies outlined plans to continue spending heavily on AI computing infrastructure, with capital spending forecast to reach billions of dollars in 2024. has been extended.