British-born, US-listed semiconductor architect Arm Holdings PLC (NASDAQ:ARM) is gearing up for its first fourth-quarter earnings call since executing the largest initial public offering of 2023.
Like many big players in the global technology sector, investors will be keen to see what upside the groundswell of artificial intelligence-led demand has had on Arm’s revenues.
One of Arm’s killer apps is its Neoverse V2 cores in Nvidia’s Grace CPU, which is used in conjunction with Nvidia’s cutting-edge AI-focused GPUs.
Last month, Morgan Stanley (NYSE:MS) also said new deals in China and payments from Apple should bolster Arm’s sales and profits over the medium term.
Though Arm quickly gained favour on Wall Street following its highly successful IPO, some analysts have warned that the company is overvalued given its unfair comparison to Nvidia.
Arm generates cash through royalties on its designs, rather than hardware sales like Nvidia and other chipmakers such as AMD.
This makes new and ongoing licensing deals a key point of focus in Arm’s earnings.
Research and development costs are also something to watch; Higher Arm royalty rates will need to be justified with better architecture, which could increase R&D costs and thus impact earnings growth in the near term.
Arm shares have gained nearly 80% since going live on the Nasdaq in September 2023.
Results are due on Wednesday, 8 May.