Arm Holdings PLC (NASDAQ:ARM) shares opened Thursday sharply lower, losing 7.5%, as concerns over the chip-maker's v9 chips which are feared to have slowed.
It comes after a year in which the bar was raised in terms of investor expectations, amidst the excitement for the AI ‘boom’.
Arm’s financials were, otherwise, strong with the third-quarter metrics exceeding forecasts – revenue was up 19% year-on-year, ahead of a $946 million consensus and earnings came in at 39 cents per share, from 25 cents.
Looking ahead, Arm confirmed fourth-quarter revenue guidance between $1.18 billion and $1.28 billion, although full-year guidance narrowed to $3.94 billion to $4.04 billion, from $3.8 billion to $4.1 billion.
In New York, Arm stock stabilised somewhat to $168 per share, after dropping down to $159 shortly after Thursday’s open.
Analysts at Citi, repeated a ‘buy’ and a $200 price target, with its focus on the slightly further ahead outlook as more AI-driven revenues are developed.
Citi, in a note, said “While there is not much change to numbers with this set of results, there is clearly building momentum in various areas of Arm’s business, all largely centred around AI.
“Arm is accelerating R&D to address these, as it is increasingly present in myriad initiatives from the already known hyperscaler custom silicon to the newer Stargate, Cristal and Nvidia DIGITS initiatives.
“Given the development cycles, we don’t expect material contribution from these areas in the next year or two, but Arm’s improved positioning gives us greater conviction in its long-term growth outlook.”