What's Going On With Arm Holdings Stock Thursday?

Arm Holdings Plc ARM shares initially traded lower after the company reported second-quarter financial results, but reversed course and moved higher near the open on Thursday as positive analyst revisions came in. Here’s what you need to know.

What To Know: Arm reported second-quarter adjusted earnings of 30 cents per share, beating analyst estimates of 26 cents per share, according to Benzinga Pro. In addition, the company reported second-quarter revenue of $844 million, beating analyst estimates of $808.37 million.

Arm reported $330 million in revenue from licensing and other sources, and $514 million from royalties. Royalty revenue was up 23% year-over-year, primarily driven by continued adoption of Armv9, as well as an overall smartphone market recovery.

The chip design firm reported $475 million in trailing 12-month free cash flow. Arm said it ended the quarter with $2.36 billion in cash, cash equivalents and short-term investments.

“Demand for our high-performance Armv9 and CSS compute platforms continues to exceed expectations, and to accelerate our licensing and royalty revenue growth. AI everywhere is generating new opportunities for the Arm compute platform from the cloud to the edge," said Rene Haas, CEO of Arm Holdings.

Arm issued guidance for the third quarter and affirmed its 2025 fiscal-year guidance. For the third quarter, the company sees revenue of $920 to $970 million and adjusted earnings per share of 32 cents to 36 cents.

The company sees full-year 2025 revenue of $3.8 billion to $4.1 billion and full-year adjusted earnings per share of $1.45 to $1.65.

Related Link: Jim Cramer Blasts Super Micro Computer’s Earnings: ‘Better At Exonerating Itself Than Selling’ Nvidia GPUs

Analyst Changes: Following the report, multiple analysts lifted price targets on Arm.

• Evercore ISI Group analyst Mark Lipacis maintained an Outperform rating on Arm and raised the price target from $173 to $176.
• Barclays analyst Blayne Curtis maintained an Overweight rating on Arm and raised the price target from $125 to $145.
• Susquehanna analyst Chris Rolland maintained a Neutral rating on Arm and raised the price target from $115 to $118.
• Goldman Sachs analyst Toshiya Hari maintained a Buy rating on Arm and raised the price target from $144 to $159.
• JP Morgan analyst Harlan Sur maintained an Overweight rating on Arm and raised the price target from $140 to $160.
• Needham analyst Charles Shi reiterated a Hold rating on Arm.

What Else: Arm on Thursday announced a strategic partnership with Panasonic Automotive Systems aimed at standardizing automotive architecture for software-defined vehicles.

The new partnership will see the companies adopt and extend the device virtualization framework VirtIO to decouple automotive software development from hardware and accelerate automotive industry development cycles.

ARM Price Action: At the time of publication, Arm shares are trading 4.01% higher at $150.48, per data from Benzinga Pro.

Image: Courtesy of Arm Holdings Plc