Arm Holdings (ARM) Delivers ‘Respectable’ Quarter—But Investors Wanted More

Arm Holdings plc (NASDAQ:ARM) is one of the AI Stocks Making Waves on Wall Street.  On July 31, Benchmark analyst Cody Acree reiterated a Hold rating on the stock without a price target.

Bechmark noted that Arm has delivered “a very respectable quarter”, delivering robust growth across major metrics. Even though the report and outlook aligned with Street expectations, it failed to offer upside that investors had grown accustomed to since the company’s debut.

“Although Arm turned in a very respectable quarter, its second best ever, with solid growth across most its major metrics, the report and outlook were just in-line with Street expectations and its EPS guidance was light by $0.02, at the midpoint, on higher expected R&D spending. With the stock down about 8% after hours, the lack of upside to estimates looks to have disappointed investors, who had become used to Arm delivering strong beat and raise reports every quarter since the company came public in 2023, except for now the past two quarters where their outlook was softer than anticipated.”

An executive presenting share and portfolio performance of the investment management company to a boardroom full of investors.

The in-line results are a consequence of a softer smartphone market and a slight 1% annual decline in licensing revenue after a strong previous quarter.

“While there were many positives in this quarter, we believe investors will once again need time to fully consider the details of this report, with the company’s shares likely lacking a material positive catalyst for at least the short-term.”

The firm reiterated its hold rating, looking for improving market trends and a possibly more attractive valuation.

Arm Holdings plc (NASDAQ:ARM) is a semiconductor and software design company that designs and manufactures semiconductor technology and other related products.

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