Arm’s Cautious Forecast Reflects Licensing Delays and Market Uncertainty

Arm Holdings has issued a cautious sales forecast for its current fiscal quarter, citing delays in closing new licensing deals. The chip design company expects revenue between $1 billion and $1.1 billion, slightly below analysts’ higher expectations. Adjusted profit is projected to be between 30 and 38 cents per share, also falling short of market estimates.

Following the announcement, Arm’s shares dropped more than 8% in after-hours trading. Before this, the stock had seen minimal growth in 2025. CEO Rene Haas explained that while customer interest in Arm’s technology remains strong—especially for artificial intelligence (AI) applications—the company wants to confirm licensing agreements before including the revenue in its forecast.

Arm earns money through license fees and royalties. In the last quarter, it generated $634 million from licenses and $607 million from royalties. Total revenue rose 34% year-over-year to $1.24 billion, slightly above Wall Street’s $1.23 billion prediction. Adjusted profit reached 55 cents per share, exceeding the 52 cents expected.

Despite the conservative outlook, Arm remains optimistic about its long-term prospects. The company is expanding into data centers and personal computers to capitalize on growing AI investment. It is also involved in AI infrastructure projects in the U.S. and Japan, working alongside major players like OpenAI and SoftBank, its majority owner.

Arm’s forecast aligns with other chipmakers who have signaled a strong start to 2025 but remain cautious due to economic uncertainties. Arm’s technology continues to power most of the world’s smartphones and is increasingly used in advanced computing.

Source: Livemint