A copy of ARM is an electronic chip board during a joint ceremony to launch the partnership between Malaysia and ARM Holdings on March 5, 2025 in Kuala Lumpur, Malaysia.
Budget Day | Nurphoto Getty Images
Shares of a UK-based semiconductor designer Arm Holdings The company’s licensing revenue fell 7.48% in after-hours trading on Wednesday after it missed Wall Street estimates.
Arm’s third-quarter licensing revenue rose 25% from a year earlier to $505 million, but was 2.9% below the $519.9 million expected by analysts polled by FactSet.
“ARM fell -8% in recent trading after narrowly missing its guidance — a negative reading from Qualcomm’s numbers didn’t help as ARM’s chip designs are often used in smartphones,” said Andrew Jackson of Ortus Advisors.
shares Qualcomm Also, 9.68% nosedived after hours on Wednesday. While the company’s first-quarter financial results beat expectations, its outlook was disappointed by the global storage shortage.
Despite Wall Street’s lack of licensing revenue estimates, Arm posted record quarterly earnings 1.242 billion in the last three months of 2025, which is due to the demand of artificial intelligence. That beat LSEG SmartEstimates by 1.54%, which are based on more accurate analyst estimates.
Arm’s chip design powers most of the world’s smartphones and is widely used in AI data centers and edge computing devices.
“ARM is trying to diversify into AI chips used for DC/servers, but its success remains uncertain and its business model is still dependent on royalties from chips used in consumer products such as phones,” Jackson said.
If Chinese smartphone production falls due to memory shortages next year, as Qualcomm suggests, Arm’s outlook could get worse before it gets better, he added.
Shares in Arm, which floated in 2023, have also faced pressure from the broader tech market on their way to success and are down 4% year-to-date.