Arm’s disappointing guidance for the current quarter has led to a sharp decline in its share price, raising concerns about a slowdown in artificial intelligence (AI) chip demand. The company reported robust quarterly earnings, with revenue and profit growth exceeding market expectations. However, CEO Rene Haas’ cautious outlook for the full year 2025 has sparked fears of a potential decline in AI chip sales.
Despite this, Arm remains an attractive stock, largely insulated from the Chinese DeepSeek-led selloff in technology shares. The company’s quarterly results showed significant revenue growth, with royalty revenue increasing by 23% and licence and other revenue growing by 14%. Arm’s operating margin widened to 45%, up from 43.8% last year.
Arm’s dominant position in the smartphone market and its supply of semiconductor design platforms to major manufacturers have contributed to its strong earnings. The company has also made significant investments in AI research, including a partnership with US President Donald Trump’s $500bn AI infrastructure project, Stargate.
However, Arm’s cautious outlook is driven by concerns about a slowdown in AI chip demand. Unlike other chipmakers, Arm develops hardware designs that enable communication between software and computer chips, generating revenue through licensing fees and royalties. As a result, the company has indirectly benefited from the AI boom, but its guidance for the current quarter suggests a potential decline in sales.
Analysts are watching closely as Arm forecasts March-quarter revenue of between $1.18bn and $1.28bn, with the midpoint slightly above estimates. The company’s full-year revenue guidance has also been narrowed to between $3.94bn and $4.04bn, down from its previous forecast.
Source: https://www.euronews.com/business/2025/02/06/crude-oil-prices-fall-to-a-year-low-as-us-china-trade-war-intensifies