ARM (NASDAQ:ARM) Releases Earnings Results, Beats Estimates By $0.05 EPS

ARM (NASDAQ:ARM) released its quarterly earnings results on Wednesday. The company reported $0.45 EPS for the quarter, beating the consensus estimate of $0.40 by $0.05, FiscalAI reports. The business had revenue of $1.29 billion for the quarter, compared to analysts’ expectations of $1.26 billion. ARM had a net margin of 20.25% and a return on equity of 12.56%. ARM’s revenue was up 22.4% compared to the same quarter last year. During the same period in the prior year, the firm earned $0.35 earnings per share. ARM updated its Q2 2027 guidance to 0.430-0.510 EPS.

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

• Record Q1 results: Revenue rose 22% year over year to $1.29 billion, while licensing and royalty revenue both reached records; non-GAAP EPS of $0.45 exceeded the high end of guidance.
• Accelerating data-center momentum: Data-center royalty revenue more than doubled again, supported by deployments from major hyperscalers and growing adoption of Arm Neoverse CPUs, whose cumulative shipments have surpassed 1.5 billion cores.
• Arm AGI CPU demand is strengthening: Demand for the new CPU now exceeds $2 billion versus the initially secured $1 billion opportunity for fiscal 2027–2028, and management’s confidence in exceeding $1 billion has increased as additional manufacturing capacity is secured.
• Smartphone market weakness is pressuring royalties: Higher memory prices are weighing on handset demand across more market segments, leading management to reduce its royalty-growth expectation for the year from roughly 20% to the high teens, although cloud AI growth is helping offset the impact.
• Continued investment and near-term guidance: Operating expenses are rising as Arm expands engineering efforts for next-generation architectures and AGI CPUs; Q2 revenue is guided to $1.38 billion at the midpoint, with royalty growth in the low teens and licensing growth of about 30%.

ARM Stock Performance

NASDAQ:ARM traded up $3.28 on Friday, reaching $244.82. The company’s stock had a trading volume of 5,177,434 shares, compared to its average volume of 8,582,567. ARM has a 1-year low of $100.02 and a 1-year high of $452.70. The firm has a market cap of $261.49 billion, a PE ratio of 252.05, a PEG ratio of 6.99 and a beta of 3.76. The business’s 50-day moving average price is $329.98 and its two-hundred day moving average price is $212.71.

Insiders Place Their Bets

In other ARM news, insider William Abbey sold 6,566 shares of the firm’s stock in a transaction that occurred on Monday, June 1st. The shares were sold at an average price of $402.72, for a total transaction of $2,644,259.52. Following the sale, the insider directly owned 20,563 shares in the company, valued at approximately $8,281,131.36. This trade represents a 24.20% decrease in their position. The sale was disclosed in a filing with the SEC, which is accessible through this link. Also, CFO Jason Child sold 31,920 shares of ARM stock in a transaction that occurred on Wednesday, May 20th. The shares were sold at an average price of $226.54, for a total transaction of $7,231,156.80. Following the completion of the transaction, the chief financial officer directly owned 174,232 shares in the company, valued at approximately $39,470,517.28. The trade was a 15.48% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last three months, insiders sold 216,049 shares of company stock worth $52,101,605.

Institutional Inflows and Outflows

Several institutional investors and hedge funds have recently made changes to their positions in ARM. Invesco Ltd. lifted its position in ARM by 36.9% in the 4th quarter. Invesco Ltd. now owns 2,426,850 shares of the company’s stock valued at $265,279,000 after acquiring an additional 654,727 shares in the last quarter. Wellington Management Group LLP increased its holdings in ARM by 41.6% during the 4th quarter. Wellington Management Group LLP now owns 2,149,159 shares of the company’s stock worth $234,925,000 after purchasing an additional 631,576 shares in the last quarter. Nuveen LLC raised its stake in shares of ARM by 49.7% in the 4th quarter. Nuveen LLC now owns 1,364,101 shares of the company’s stock valued at $149,110,000 after purchasing an additional 452,725 shares during the period. Lansdowne Partners UK LLP raised its stake in shares of ARM by 687.1% in the 4th quarter. Lansdowne Partners UK LLP now owns 472,076 shares of the company’s stock valued at $51,603,000 after purchasing an additional 412,101 shares during the period. Finally, Artisan Partners Limited Partnership lifted its holdings in shares of ARM by 44.4% in the fourth quarter. Artisan Partners Limited Partnership now owns 1,243,137 shares of the company’s stock valued at $135,887,000 after purchasing an additional 382,512 shares in the last quarter. Institutional investors and hedge funds own 7.53% of the company’s stock.

More ARM News

Here are the key news stories impacting ARM this week:

• Positive Sentiment: Results exceeded expectations: Fiscal Q1 revenue rose 22.4% year over year to $1.29 billion, above the roughly $1.26 billion consensus, while adjusted EPS of $0.45 beat estimates of $0.40. Management also issued fiscal Q2 EPS guidance of $0.43-$0.51, above the $0.39 analyst consensus. Arm forecasts quarterly revenue above estimates on AI-driven chip demand
• Positive Sentiment: AI and data-center demand remain the main catalyst: Arm cited rising demand for AI CPUs, expanding cloud infrastructure and record customer momentum. Data-center royalty revenue reportedly doubled, while demand tied to Arm’s upcoming AGI CPU roadmap has surpassed $2 billion. Investors are watching whether this product can accelerate royalty growth. ARM Q1 Earnings Call Highlights AI CPU Demand and Data Center Growth
• Positive Sentiment: Some analysts remain constructive: Citi reiterated a Buy rating and $300 price target, while TD Cowen maintained Buy with a $350 target. Needham also reaffirmed Buy, although its $255 target implies limited upside from recent levels. Arm remains key AI infrastructure beneficiary despite softer handset outlook
• Neutral Sentiment: The key debate is execution: Arm’s AI exposure spans cloud, edge and automotive markets, but investors need evidence that the AGI CPU launch converts strong bookings and interest into sustained royalty revenue. Supply constraints and the timing of new deployments could create volatility. 1 Key Metric To Watch That Could Send Arm Stock Soaring
• Negative Sentiment: Royalty growth and handset weakness are concerns: Fiscal Q2 royalty growth was guided at about 13%, with smartphone weakness and memory-price pressure weighing on expectations. This prompted some investors to view the otherwise strong report as insufficient. Memory Prices Hit Arm’s Royalties as Stock Falls
• Negative Sentiment: Valuation and target-price reductions limit upside: After a reported 110.5% year-to-date advance, ARM trades at an exceptionally high earnings multiple, leaving little room for disappointment. Rosenblatt cut its target to $250, Morgan Stanley raised its target only to $212 while retaining Equal Weight, and RBC reduced its target to $340. Arm Stock Looks Pricey Yet Strong On AI Growth

Analyst Upgrades and Downgrades

A number of brokerages have commented on ARM. New Street Research upgraded ARM from a “neutral” rating to a “buy” rating and set a $260.00 price objective on the stock in a research report on Thursday. Susquehanna boosted their target price on ARM from $300.00 to $320.00 and gave the stock a “positive” rating in a research report on Tuesday, July 21st. Benchmark started coverage on ARM in a research note on Thursday, July 16th. They set a “hold” rating on the stock. Raymond James Financial reiterated an “outperform” rating on shares of ARM in a report on Thursday, May 7th. Finally, Morgan Stanley lifted their price objective on ARM from $202.00 to $212.00 and gave the stock an “equal weight” rating in a research report on Thursday. Eighteen analysts have rated the stock with a Buy rating, seven have given a Hold rating and one has assigned a Sell rating to the company. Based on data from MarketBeat, ARM has an average rating of “Moderate Buy” and a consensus price target of $285.33.

ARM Company Profile

Arm Limited (NASDAQ: ARM) is a global semiconductor IP company best known for designing energy-efficient processor architectures and related technologies that underpin a wide range of computing devices. Founded in 1990 as a joint venture between Acorn Computers, Apple and VLSI Technology and headquartered in Cambridge, England, Arm develops the ARM instruction set architectures and core processor designs that chipmakers license and integrate into custom system-on-chip (SoC) products. The company operates a licensing and royalty business model rather than manufacturing chips itself.

Arm’s product portfolio includes CPU core families (such as Cortex and Neoverse lines), GPU and multimedia IP (Mali), neural processing units (Ethos) and a suite of system and physical IP blocks.