Arm Holdings plc (NASDAQ:ARM) shares fell on Thursday after the chip designer reported fiscal first-quarter 2026 earnings that missed revenue expectations and issued a weaker-than-expected outlook for the current quarter.
What To Know: For the first quarter, Arm posted revenue of $1.053 billion, just under the $1.055 billion analyst estimate. Adjusted earnings per share came in at 35 cents, matching analyst expectations.
The company reported strong royalty revenue, which increased 25% year-over-year to $585 million, driven by wider adoption of the Armv9 chip architecture and growth in data center usage. However, license and other revenue declined 1% year-over-year, partially offsetting the gains.
Operating cash flow was $332 million, and free cash flow was $150 million in the quarter. Arm ended the period with $2.91 billion in cash, cash equivalents and short-term investments.
Looking ahead, Arm guided for second-quarter revenue between $1.01 billion and $1.11 billion, versus consensus estimates of $1.056 billion. Adjusted EPS guidance for second-quarter ranged from 29 to 37 cents, versus estimates of 35 cents.
Following the results, multiple analysts adjusted price targets.
- Keybanc analyst John Vinh maintained an Overweight and raised the price target from $175 to $190.
- Raymond James analyst Srini Pajjuri maintained an Outperform and raised the price target from $140 to $165.
- UBS analyst Timothy Arcuri maintained a Buy and lowered the price target from $185 to $175.
- Morgan Stanley analyst Lee Simpson maintained an Overweight and lowered the price target from $194 to $180.
ARM Price Action: Arm shares closed Thursday down 13.4% at $141.46, according to Benzinga Pro.
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