fbpx

Arm Doubles on Q3 Revenue Beat and Raised Guidance

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at
  • Arm delivered higher-than-expected Q3 results.
  • Guidance suggests growth rate could persist throughout next fiscal year.
  • Share price surges more than 72% after the report.

Arm Holdings is the biggest UK chip designer which architects, develops, and licenses high-performance, low-cost, and energy-efficient IP solutions for CPUs, GPUs, NPUs and interconnect technologies, on which many of the world’s leading semiconductor companies rely to develop their products. Arm licenses the instruction sets for modern chips to partners, who then make chips with customizations for their unique applications.

Arm span off from Japan’s SoftBank and went public in September 2023 and listed on the Nasdaq; however, SoftBank still owns roughly 90% of Arm’s shares. Arm’s IPO in the U.S. was the biggest in 2023, valuing the company at $65 billion on the first day of trading.

The company reported its third quarter earnings results on the 7 th of February 2024. Arm posted a revenue of $824 million for the quarter ending in December, up 14% year-on-year, smashing analysts’ expectations. The chip designer reported adjusted earnings per share of $0.29 and lifted its full-year guidance from a range of $1.00-$1.10 to $1.20-$1.24. Revenue guidance for the fourth quarter was revised higher to $850 million, beating estimates.

Arm’s revenue was supported by surging demand for new artificial intelligence (AI) applications. The December quarter earnings have improved significantly from the prior quarter in which Arm endured high remuneration costs associated with its listing.

A graph of a graph

Description automatically generated with medium confidence

Source: TradingView

The stock price rallied strongly on the back of better-than-expected profit, driven by royalty revenue and better-than-expected licensing revenue. Investors were also encouraged by Arm’s raised fiscal year revenue guidance to a range of $3.15 billion-$3.2 billion from $2.9 billion-$3.1 billion previously.

The share price surged more than 72% since the third quarter result, lifting Arm’s market capitalisation to $152.7 billion, which helped the company to rank among the world’s most valuable chip companies. The upbeat guidance reinforces the view that ARM is a key beneficiary of the AI boom, and especially premium smartphones.

Arm is largely a technology licensing company. The company earns royalties from licensing its designs, used by some of the biggest chipmakers in the world, such as NVIDIA – one of the largest customers for Arm.

Arm’s primary market – smartphone technology, is seeing a recovery from contraction. Arm’s royalty revenue from smartphones had improved as device sales rose and Arm’s V9 designs are in all of the premium smartphones such as Apple and Samsung. Arm provides the computing power needed to run Google’s latest large language model Gemini Nano.

The company is also expanding into new markets as demand for AI surges. Arm continues to gain market share in the growth markets of cloud servers and automotive, which drive new streams of royalty growth.

Despite the bright outlook, the share price almost doubled in three trading sessions and investors might witness some profit taking after such a monstrous run. While shares of the company are tightly held as SoftBank sold less than 10% of Arm during the IPO, which is considered to be beneficial for the value of the shares, traders should brace for some volatility in the coming month as the 180-day lockup period expires on the 14 th of March 2024 and SoftBank would have the opportunity to sell shares at its discretion.

Overall, the world is in the early stages of AI adoption and growth is likely to remain robust in the years ahead. While Arm is also a beneficiary, chipmakers NVIDIA and AMD have a central position in the AI boom as they produce most of the processors used for AI models, such as those that power ChatGPT.

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

Related Posts

Sandeep Rao

Research

Sandeep joined Leverage Shares in September 2020. He leads research on existing and new product lines, asset classes, and strategies, with special emphasis on analysis of recent events and developments.

Sandeep has longstanding experience with financial markets. Starting with a Chicago-based hedge fund as a financial engineer, his career has spanned a variety of domains and organizations over a course of 8 years – from Barclays Capital’s Prime Services Division to (most recently) Nasdaq’s Index Research Team.

Sandeep holds an M.S. in Finance as well as an MBA from Illinois Institute of Technology Chicago.

Violeta Todorova

Senior Research

Violeta joined Leverage Shares in September 2022. She is responsible for conducting technical analysis, macro and equity research, providing valuable insights to help shape investment strategies for clients.

Prior to joining LS, Violeta worked at several high-profile investment firms in Australia, such as Tollhurst and Morgans Financial where she spent the past 12 years of her career.

Violeta is a certified market technician from the Australian Technical Analysts Association and holds a Post Graduate Diploma of Applied Finance and Investment from Kaplan Professional (FINSIA), Australia, where she was a lecturer for a number of years.

Julian Manoilov

Marketing Lead

Julian joined Leverage Shares in 2018 as part of the company’s primary expansion in Eastern Europe. He is responsible for web content and raising brand awareness.

Julian has been academically involved with economics, psychology, sociology, European politics & linguistics. He has experience in business development and marketing through business ventures of his own.

For Julian, Leverage Shares is an innovator in the field of finance & fintech, and he always looks forward with excitement to share the next big news with investors in the UK & Europe.

Oktay Kavrak

Head of Communications and Strategy

Oktay joined Leverage Shares in late 2019. He is responsible for driving business growth by maintaining key relationships and developing sales activity across English-speaking markets.

He joined Leverage Shares from UniCredit, where he was a corporate relationship manager for multinationals. His previous experience is in corporate finance and fund administration at firms like IBM Bulgaria and DeGiro / FundShare.

Oktay holds a BA in Finance & Accounting and a post-graduate certificate in Entrepreneurship from Babson College. He is also a CFA charterholder.

Salesforce Earnings Beat but Guidance Disappoints

Baidu Q4: Why Earnings Missed Expectations

Nvidia Raises

What is an ETF? (Exchange Traded Fund)

How do Leverage Shares ETPs differ from other leveraged ETP issuers

How Do Leverage Shares ETPs Trade in Multiple Currencies

Build your own ETP Basket
Leverage Shares: Europe’s top leveraged and inverse ETP provider.
Main ETP benefits
Common investor questions

Get the Newsletter

Never miss out on important announcements. Get premium content ahead of the crowd. Enjoy exclusive insights via the newsletter only.

Welcome to Leverage Shares

Terms and Conditions

Notice

If you are not classified as an institutional investor, you will be categorised as a private/retail investor. At this time, we cannot send communications directly to private/retail investors. You are welcome to view the contents of this website.

If you are an ‘Institutional investor’, you affirm either that you are a Per Se Professional Client, or that you wish to be treated as an Eligible Counterparty Client, both as defined under the Markets in Financial Instruments Directive, or an equivalent in a jurisdiction outside the European Economic Area.

Risk Warnings

The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.

This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.

Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.

This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.

United States Visitors

The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.

Persons accessing this website in the European Economic Area

Access to this site is restricted to Non-U.S. Persons outside the United States within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Each person accessing this site, by so doing, acknowledges that: (1) it is not a U.S. person (within the meaning of Regulation S under the Securities Act) and is located outside the U.S. (within the meaning of Regulation S under the Securities Act); and (2) any securities described herein (A) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction and (B) may not be offered, sold, pledged or otherwise transferred except to persons outside the U.S. in accordance with Regulation S under the Securities Act pursuant to the terms of such securities. None of the funds on this website are registered under the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”).

Exclusion of Liability

Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.

Leverage Investment

Leverage Shares exchange-traded products (ETPs) provide leveraged exposure and are only suitable for experienced investors with knowledge of the risks and potential benefits of leveraged investment strategies.

Cookies

Leverage Shares Management Company may collect data about your computer, including, where available, your IP address, operating system and browser type, for system administration and other similar purposes (click here for more information). These are statistical data about users’ browsing actions and patterns, and they do not identify any individual user of the website. This is achieved by the use of cookies. A cookie is a small file of letters and numbers that is put on your computer if you agree to accept it. By clicking ‘I agree’ below, you are consenting to the use of cookies as described here. These cookies allow you to be distinguished from other users of the website, which helps Leverage Shares Company provide you with a better experience when you browse the website and also allows the website to be improved from time to time. Please note that you can adjust your browser settings to delete or block cookies, but you may not be able to access parts of our website without them.

This website is maintained by Leverage Shares Management Company, which is a limited liability company and is incorporated in Ireland with registered offices at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2. 

By clicking you agree to the Terms and Conditions displayed.