Arm Shares Drop as Revenue Forecast Falls Short of Analyst Expectations

Following the release of its financial results for the fourth quarter, shares of semiconductor design company Arm plummeted by 8.22% during premarket trading on Thursday. Despite reporting a significant increase in revenue for Q4, reaching $928 million, representing an impressive 47% year-on-year rise, Arm’s forecast for the upcoming fiscal quarter left investors feeling apprehensive. Arm projected sales between $875 million and $925 million for the fiscal first quarter of 2025, falling below analyst predictions. For the full year of 2025, Arm anticipates revenues to fall somewhere between $3.8 billion and $4.1 billion, with analysts previously estimating a figure of $4 billion. The decrease in revenue projections has caused share prices to decline. However, Arm noted that the surge in sales during Q4 was largely attributed to a notable increase in licensing agreements for advanced AI chips, with multiple high-value deals being signed. The company also highlighted the significant rise in royalty revenues, which rose by 37% year-on-year to reach $514 million, due to the growing adoption of Armv9-based processors.