ARM (NASDAQ:ARM) Issues Quarterly Earnings Results, Beats Expectations By $0.04 EPS

Key Points

• ARM reported quarterly EPS of $0.52, beating the $0.48 consensus, while revenue of $1.44 billion topped estimates and rose 27% year over year.
• AI and data-center demand are bolstering the outlook: data-center royalties doubled, and ARM forecast Q3 revenue of about $1.54 billion. However, higher memory prices are weighing on smartphone demand and keeping edge AI royalties roughly flat.
• Despite the earnings beat and upbeat forecast, ARM shares fell after the report, reflecting a mixed investor response and concerns about the stock’s high valuation.

ARM (NASDAQ:ARM - Get Free Report) posted its quarterly earnings data on Wednesday. The company reported $0.52 earnings per share for the quarter, beating analysts' consensus estimates of $0.48 by $0.04, FiscalAI reports. ARM had a net margin of 20.25% and a return on equity of 12.24%. The company had revenue of $1.44 billion during the quarter, compared to analysts' expectations of $1.38 billion. During the same period in the prior year, the company posted $0.39 EPS. The firm's revenue for the quarter was up 27.1% on a year-over-year basis.

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

• Arm reported record Q2 revenue of $1.44 billion, up 27% year over year, and non-GAAP EPS of $0.52, up 33%. Q3 revenue guidance is $1.54 billion at the midpoint, representing approximately 24% year-over-year growth.
• License and other revenue rose 50% to a record $773 million, reflecting stronger customer commitments and ATA and CSS agreements. Management views this licensing momentum as a leading indicator of future royalties, though license revenue can vary with deal timing.
• Data center royalties doubled year over year, while Arm’s share at top hyperscalers rose above 50% in calendar 2025; Arm expects it to exceed 60% by the end of 2026. Executives cited growing adoption across major cloud platforms and a shift from x86 as drivers of further growth.
• Demand for the Arm AGI CPU strengthened, with purchase orders from multiple customers and improved confidence in achieving up to $2 billion in revenue across fiscal 2027 and 2028; initial deliveries remain targeted for fiscal Q4 2027. The company is still securing supply, and its first-generation product is expected to have gross margins of 30%–40%.
• Higher memory prices are weighing on smartphone demand and keeping edge AI royalties roughly flat; Arm expects Q3 royalty growth in the low single digits year over year. Management expects smartphone conditions to normalize, but the near-term pressure offsets strength in cloud and physical AI.

ARM Stock Performance

Shares of NASDAQ ARM traded down $10.69 during trading on Wednesday, reaching $191.80. The stock had a trading volume of 8,785,848 shares, compared to its average volume of 5,025,869. The firm's 50 day moving average price is $256.08 and its two-hundred day moving average price is $229.28. ARM has a one year low of $100.02 and a one year high of $452.70. The stock has a market cap of $204.86 billion, a PE ratio of 220.10, a P/E/G ratio of 5.91 and a beta of 3.93.

Analyst Upgrades and Downgrades

A number of brokerages recently commented on ARM. KeyCorp increased their price target on ARM from $300.00 to $430.00 and gave the company an "overweight" rating in a report on Tuesday, July 14th. Guggenheim reiterated a "buy" rating and set a $255.00 target price on shares of ARM in a research note on Thursday, July 30th. Needham & Company LLC reissued a "buy" rating and set a $255.00 price target on shares of ARM in a research report on Thursday, July 30th. New Street Research upgraded shares of ARM from a "neutral" rating to a "buy" rating and set a $260.00 price target for the company in a research note on Thursday, July 30th. Finally, Benchmark initiated coverage on shares of ARM in a report on Thursday, July 16th. They set a "hold" rating for the company. One investment analyst has rated the stock with a Strong Buy rating, eighteen have issued a Buy rating, seven have given a Hold rating and one has given a Sell rating to the company. According to MarketBeat.com, the stock has an average rating of "Moderate Buy" and a consensus price target of $303.32.

Insider Activity at ARM

In related news, CFO Jason Child sold 10,400 shares of the stock in a transaction dated Monday, September 21st. The shares were sold at an average price of $300.00, for a total transaction of $3,120,000.00. Following the sale, the chief financial officer owned 153,442 shares in the company, valued at $46,032,600. This represents a 6.35% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan.

More ARM News

Here are the key news stories impacting ARM this week:

• Positive Sentiment: Fiscal Q2 revenue rose 27% year over year to $1.44 billion, beating analyst estimates; the commonly cited EPS figure of $0.52 also topped the $0.48 consensus. Data-center royalties more than doubled, reflecting demand for Arm technology in AI infrastructure. Arm Shares Slip Despite Q2 Double-Beat: Details
• Positive Sentiment: Arm forecast third-quarter revenue above analyst expectations, citing the AI-spending boom. The company also said Amazon’s Graviton-related revenue commitments increased more than 20-fold year over year, and that its chips power over half of hyperscaler servers—signals of expanding adoption. Arm forecasts third-quarter revenue above estimates on AI spending boom Amazon Graviton commitments
• Neutral Sentiment: AI and data-center demand are strengthening Arm’s growth outlook, but valuation remains a concern after a major multi-year share-price run. That leaves the stock vulnerable if investors conclude growth is not sufficient to justify expectations. Arm stock valuation after its run
• Negative Sentiment: Despite the quarterly beat and upbeat forecast, shares declined following the report. One article highlighted a nearly 75% profit miss, suggesting that profitability measures may have disappointed even as the headline EPS and revenue figures beat estimates; this mixed picture may have prompted investors to sell into the results. Arm Q2 2027 earnings: revenue beats, but profit misses Arm beats quarterly targets, but stock falls

About ARM

Arm Holdings plc NASDAQ: ARM is a semiconductor and software design company that develops central processing unit (CPU) architectures and related intellectual property. Rather than manufacturing chips itself, Arm licenses its designs and instruction-set architectures to semiconductor companies and technology manufacturers, which incorporate them into their own products.

The company's offerings include CPU processor cores, graphics processing units through its Mali product family, system IP, development tools and software.

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