News about Arm Holdings

Arm Holdings shares fell almost 10% in Friday's session amid a broad sell-off in semiconductor stocks. The trigger was Intel's third-quarter report: although revenue grew in double digits and its data center and AI unit gained substantially, its fourth-quarter guidance was unexpectedly weak, forecasting sequential declines in revenue, gross margin and non-GAAP earnings per share, well below analyst estimates. Many chip stocks fell heavily, with Intel's outlook seen as a warning sign for the sector. The author argues markets tend to overreact and that Arm faces risks from the current contraction in PC shipments and rising component costs, though its asset-light licensing model may leave it less exposed than Intel. The author says they are waiting for Arm's fiscal second-quarter 2027 results, scheduled for Wednesday, Nov. 4 after market close.

The article compares Coherent (COHR) and Arm Holdings (ARM), two technology companies that benefit from AI infrastructure. For COHR, it points to rising demand for high-speed optical networking as AI clusters expand and to its broad portfolio, from indium phosphide lasers to silicon photonics, and says PhotonLink could help move the company toward integrated optical subsystems. For ARM, it highlights AI infrastructure spending by Anthropic, Alphabet (GOOG) and Microsoft (MSFT), and rising CPU demand from autonomous AI agents. According to Zacks Consensus Estimates, COHR's fiscal 2027 sales and EPS are projected to grow 50% and 68%, while ARM's current-year sales and EPS are expected to rise 22% and 24%, and EPS estimates for both have been flat over the past 60 days.

Arm Holdings' annualized contract value (ACV) reached $1.73 billion in fiscal Q1 2027, up 13% from $1.53 billion a year earlier and from $1.66 billion in fiscal Q4 2026. Licensing and other revenues rose 23% year over year to $574 million, and royalty revenues climbed 22% to $715 million on broader adoption of newer architectures. The article says these trends set a favorable backdrop for the upcoming fiscal Q2 report, but flags the timing of large licensing deals, variability in customer spending, customer concentration and elevated R&D expenses as key concerns. It also points to Qualcomm and NVIDIA as U.S.-listed semiconductor peers benefiting from demand for advanced computing.

A federal jury in Delaware found that Arm Holdings breached a key architectural licensing agreement with Qualcomm and interfered with its business relationship with Meta Platforms, awarding Qualcomm nominal damages of US$2. The verdict confirms Qualcomm's right to continue custom CPU development under the license, which the article says gives clearer legal footing for its Oryon CPU roadmap. The article links this to Qualcomm's expanded Amazon collaboration on custom AI data center silicon, which could help offset pressure on handset and modem revenue. It also cautions that Qualcomm still faces concentrated customer risk and potential margin pressure if handset volumes weaken faster than its diversification efforts progress.

A jury in Wilmington, Delaware deliberated about four hours on Friday without reaching a verdict in Qualcomm's lawsuit against Arm Holdings and will return Tuesday. Qualcomm alleges Arm withheld software patches and tools, breached a deal to keep Qualcomm's price within 10% of the lowest price for Arm's processor designs, and leaked a 2024 letter to Bloomberg to harm its dealings with Meta. Arm says Qualcomm was “not harmed in the least” and calls the suit leverage in licensing talks. Qualcomm's license runs until 2033, and the key question is whether the companies can agree on terms for newer versions. In its latest quarter Qualcomm reported $9.9 billion in revenue and $2.21 per share, while memory prices are pressuring phone demand and margins.