(Reuters) – Arm Holdings shares fell on Thursday. That’s because annual revenue forecasts that were softer than chip designers had expected dampened some of the enthusiasm for the stock after its AI-powered surge in recent months.
After falling as much as 8.5%, the stock pared some of its losses to trade 1.5% lower at $104.50 in the afternoon.
Bets that Arm would benefit from the surge in AI computing have seen the company’s stock price double since its initial public offering last September, giving it a market value of more than $100 billion.
“This is a classic case of ARM failing to live up to rising expectations,” said Angelo Gino, an analyst at CFRA Research. He added that there is.
UK-based Arm, which makes money through licensing and royalties of its chip designs, is expanding into the data center market, helping carriers power new AI models and become a leading supplier. It is trying to build its own chips to reduce dependence on Nvidia.
Tejas Desai, research analyst at Global .
The British chip designer said it expects full-year sales to be between $3.8 billion and $4.1 billion, according to LSEG data, with the midpoint slightly below the consensus estimate of $3.99 billion. ing.
However, March quarter revenue and current quarter forecasts exceeded expectations.
At least two analysts lowered their price targets for Arm, whose chip design powers nearly every smartphone in the world.
Arm stock trades at 64.68 times trailing 12-month earnings, significantly higher than the industry median of 19.95 times, according to LSEG data.
Shares of Nvidia and Advanced Micro Devices fell 1.6% and 1%, respectively, on Thursday.
(Reporting by Yuvraj Malik in Bengaluru; Editing by Anil D’Silva and Shilpi Majumdar)
