Chip designer Arm Holdings PLC (NASDAQ:ARM) saw its stock drop around 9% in early trading on Thursday, as new guidance underwhelmed investors.
Arm reported its fourth quarter results showing ‘record’ revenue of $1.25 billion for the three months ended 31 March, up 34% on the same period last year. Royalty revenue reached $607 million, its highest ever for any quarter.
Meanwhile, operating income was marked at $655 million, translating to an operating margin of 52.8%. Non-GAAP diluted earnings per share stood at $0.55, up from $0.36 in the prior-year quarter
So far so rosey, or as CEO Rene Haas said: “Arm delivered record-breaking results for both the fourth quarter and the full fiscal year ending 2025.
“We surpassed $1 billion in revenue for the first time in Q4, driven by increased deployment of our CSS platforms across AI data center, cloud compute and mobile.”
Haas added: “As AI growth from the cloud to the edge creates demand for more energy-efficient compute, Arm will enable AI everywhere."
Looking ahead, Arm (which generates its revenue from chips used in smartphones, laptops and IoT devices) cautioned the potential disruption of ‘tariff-driven demand headwinds’.
Arm is now forecasting first quarter revenue between $1 billion and $1.1 billion.
Wall Street analysts previously pencilled in $1.1 billion as the ‘mid-point’ consensus for Q1.
In New York, Arm stock was down 9.33% at $112.60 in early trading.