Arm Holdings (NASDAQ: ARM) stock surged almost 50% on Thursday following the release of its third-quarter earnings, which beat expectations. The company also underscored its expanding involvement in artificial intelligence, contributing to the positive momentum.
The Arm Holdings (ARM) reported that its adjusted earnings per share for the third quarter rose to 29 cents, marking a growth from 22 cents in the same period last year. Moreover, the revenue also saw a significant rise of 14% to reach $824 million. The company attributes this growth to its increased market share in the cloud and automotive sectors and a boost in licensing revenue thanks to the growing demand for artificial intelligence (AI).
Arm’s licensing business, which enables chipmakers to purchase designs compatible with their products, performed exceptionally well, experiencing an 18% increase in revenue to $354 million compared to the previous year.
In a letter to shareholders, CEO Rene Haas and CFO Jason Child expressed their optimism for the next quarter, anticipating even better results and another record-breaking performance. They highlighted the company’s success in growing royalty revenue, meeting the rising demand for computing and AI across various markets, and satisfying customers’ needs for Arm’s platforms.
Arm expects its fiscal fourth-quarter revenue to range between $850 million and $900 million. If achieved, this would push the full fiscal year 2024 revenue to a substantial $3.2 billion, surpassing the company’s initial projection of $2.96 billion to $3.08 billion made in November.
It’s worth noting that Arm Holdings, spun off from Japan’s SoftBank, started trading American depository shares (ADS) on the Nasdaq in September. Its initial public offering marked the largest in the U.S. since 2021.
Arm Holdings (NASDAQ: ARM) Stock Price Action
ARM stock soared 47.89% to close at $113.89 on Thursday. The traders had exchanged hands with 105,866,139 (105.86 million) shares compared to the average daily trading volume of 7 million.
Edward Cooke is a financial analyst, freelance writer, and editor. He has six years of experience in financial journalism. He has an in-depth understanding of equities markets, tracking major indices and providing real-time analysis on stock price movements, corporate earnings, and market sentiment.
