ASML’s lackluster coverage has pushed down other AI stocks.
shares of arm holdings (arm -11.99%) Today I received ~’s disappointing financial report and took it in stride. ASML Holdings (ASML -7.09%) This led to a widespread decline in artificial intelligence (AI) stocks. Arm was the worst performer in the group, ending the day with its stock down 12%, even worse than ASML’s 7.1% decline.
Arm stock is scary
Artificial intelligence stocks have soared in recent months, and Arm has been one of the winners. The chip designer, known for his highly efficient CPU architecture, has seen revenue growth accelerate due to breakthrough technology.
However, this morning’s ASML update threw a damper on the sector, leading to a sharp decline in AI stocks. Arm was hit hard by this news as one of the most expensive companies in the sector.
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ASML reported a significant decline in revenue, and its guidance expected sales to continue to decline in the second quarter. The news was mostly in line with Wall Street expectations, but the first quarter, revenue and guidance all fell short of analysts’ expectations.
ASML expects revenue growth to improve in the second half of this year and accelerate in 2025, with the latest information showing increased demand from chip makers including: TSMC It may not be as strong as you expected. This could be a warning sign for Arm, whose stock soared in February on promises to accelerate sales growth driven by AI-related demand.
What’s next for Arm?
Although there are high expectations for Arm’s stock, the company trades at a forward price-to-earnings ratio (PER) of over 100, and has not achieved the spectacular earnings growth of its partner companies. do not have. Nvidia. Still, the company believes AI has a bright future, as its CPU architecture is favored by companies like Nvidia, in part because it requires less power than alternatives.
We’ll likely get an update from Arm next month when it releases its fourth quarter earnings report. Until then, we expect the stock price to remain volatile as investors weigh the stock against AI’s future growth.
Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has positions in and recommends ASML, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
