Arm share price spikes over 30% on upbeat sales forecast; SoftBank shares jump 10% | Mint
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Business News/ Markets / Stock Markets/  Arm share price spikes over 30% on upbeat sales forecast; SoftBank shares jump 10%
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Arm share price spikes over 30% on upbeat sales forecast; SoftBank shares jump 10%

SoftBank Group Corp. shares also rallied almost 10% after Arm Holdings Plc’s bullish earnings forecast. Softbank share price traded as much as 9.6% higher in early Tokyo trading.

Arm shares have doubled from the $51 price set in its September initial public offering (IPO) to $102.11 now. (Photo: Bloomberg)Premium
Arm shares have doubled from the $51 price set in its September initial public offering (IPO) to $102.11 now. (Photo: Bloomberg)

Arm share price surged more than 30% on Wednesday after the company’s quarterly sales and profit forecast beat Wall Street expectations. 

The surge in Arm stock price has lifted its market capitalization by about $26 billion, Reuters reported.

Arm shares have doubled from the $51 price set in its September initial public offering (IPO) to $102.11 now.

Meanwhile, its parent company, SoftBank Group Corp. shares also rallied almost 10% after Arm Holdings Plc’s bullish earnings forecast. Softbank share price traded as much as 9.6% higher in early Tokyo trading.

In the December quarter Arm shares jumped 40%, likely boosting SoftBank’s net asset value to over ¥18 trillion ($121 billion). SoftBank held onto a stake of about 90% in Arm as the chip designer went public in 2023. 

Also Read: Nvidia inches close to surpassing Amazon in market value amid AI boost

The midpoints of Arm’s Q4 sales and adjusted profit forecasts range of $875 million and 30 cents per share, respectively, beat estimates of $780.3 million and 21 cents per share, according to LSEG data, Reuters reported.

It raised its guidance by roughly $100 million because markets such as automotive and AI are going to be strong in the fiscal fourth quarter, finance chief Jason Child told Reuters.

For the full fiscal year, Arm expects $3.18 billion in revenue and adjusted earnings of $1.22 per share, both above analysts' estimates of $3.05 billion and $1.07 per share.

The company expects licensing revenue for chips that power AI in data centers, phones and PCs to be a significant factor.

Also Read: PayPal tumbles after firm forecasts little profit growth in 2024

Smartphones now represent 35% of overall units shipped, versus between 60% and 70% in 2016, Child said. He said as well that AI was driving additional sales, but mostly indirectly.

Arm executives said on Wednesday the expansion strategy was starting to pay off, with customers flocking to Arm-based central processors to complement Nvidia's chips for AI work in data centers, Reuters reported.

They also said they are working on new laptops and smartphones that can handle chatbots and other AI features.

Arm makes money via licensing deals for its intellectual property and a royalty charged for each chip sold that uses its technology.

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(With inputs from Reuters)

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Published: 08 Feb 2024, 08:40 AM IST
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