Arm Shares Drop After Earnings Announcement, Highlighting High Expectations for AI Companies
Optimistic results were not enough to boost Arm Holdings' stock price on Wednesday, indicating that investors are taking a more critical view of artificial intelligence (AI) companies in today's tech stock trading. The UK-based chip design company reported third-quarter revenue of $1.24 billion, a 26% year-over-year increase and slightly above analysts' expectations of $1.23 billion. Adjusted earnings per share were 43 cents, higher than the FactSet average estimate of 41 cents. Arm's midpoint for first-quarter revenue guidance was $1.47 billion, while FactSet's average estimate was $1.44 billion. However, investors may have been looking for a more significant beat, especially as people are becoming more selective with AI-related trades. Before the earnings report, Bank of America analyst Vivek Arya noted that there had been "indiscriminate" sell-offs in chip stocks recently. Arm's shares fell 9% in after-hours trading on Wednesday.
Editor: Wang Yongsheng
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