Arm Holdings Stock Is Ripping Higher: What's Going On?

Shares of chip design firm Arm Holdings Plc ARM are soaring Thursday after the company blew away earnings expectations for the third quarter and issued a bullish outlook for fiscal year 2024. Multiple analysts also raised price targets following the print.

What Happened: Arm Holdings said third-quarter revenue increased 14% year-over-year to $824 million, which beat analyst estimates of $761.62 million, according to Benzinga Pro. The company reported adjusted earnings of 29 cents per share, which beat estimates of 25 cents per share.

“Arm delivered another quarter of record revenues driven by continued adoption of the world's most pervasive compute platform,” said Rene Haas, CEO of Arm Holdings.

"More customers moving to higher-value Armv9 technology combined with market share gains in cloud server and automotive resulted in strong royalty growth. The AI wave drove licensing growth as these new devices require Arm's performant and power-efficient compute platform.”

Outlook: Arm sees fourth-quarter revenue of $850 million to $900 million versus estimates of $780.31 million. The company expects fourth-quarter adjusted earnings to be between 28 cents and 32 cents per share versus estimates of 21 cents per share.

Arm expects full-year 2024 revenue to be between $3.155 billion and $3.205 billion versus estimates of $3.05 billion. The company expects full-year earnings to be between $1.20 and $1.24 per share versus estimates of $1.07 per share.

SoftBank acquired Cambridge, England-based Arm in 2016 for $32 billion and took the company public last year in what was the biggest IPO of 2023. Softbank still owns approximately 90% of the chip designer's outstanding shares.

See Also: No Imminent AI Bubble Burst, Says Munster: ‘We Are At The Start Of 3-5 Year Tech Run’

Analyst Changes:

• Keybanc analyst John Vinh maintained Arm with an Overweight and raised the price target from $75 to $120.
• JPMorgan analyst Harlan Sur maintained Arm with an Overweight and raised the price target from $70 to $100.
• Susquehanna analyst Chris Rolland maintained Arm with a Neutral and raised the price target from $48 to $85.
• Mizuho analyst Vijay Rakesh maintained Arm with a Buy and raised the price target from $85 to $100.

ARM Price Action: Arm shares were up over 60% at $123.42 at the time of publication, according to Benzinga Pro.

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