"Last quarter delivered what investors needed to see. Revenue hit $1.135 billion, up 34.5% year over year, beating the $1.07 billion consensus. EPS of $0.39 topped estimates of $0.34. More importantly, it marked a sharp turnaround from the prior quarter's miss, when EPS came in at just $0.12 against a $0.36 estimate."
"CEO Rene Haas struck a confident tone, stating "Arm is the compute platform for the AI era - delivering high performance, power-efficient AI everywhere." The company launched its Lumex CSS platform with 5x faster AI performance and deepened ties with Meta on AI infrastructure."
"I'll be focused on whether management can justify the premium multiple. At 134x trailing earnings, the stock trades well above the semiconductor sector average. The forward PE of 47x suggests the market expects significant earnings expansion, but recent analyst downgrades from UBS and BofA Securities cite concerns about overly optimistic royalty estimates for 2027-2028 and smartphone unit shipment declines. The key metric to watch is whether royalty growth holds up. Last quarter's 21% royalty increase was solid but slower than the prior quarter's 25% gain. Any deceleration could pressure the narrative, especially with R&D spending at 61% of revenue in recent quarters. The new Physical AI division targeting robotics and autonomous vehicles needs to show traction beyond concept."
Arm reports fourth-quarter fiscal 2026 results after the bell, following a year in which shares fell about 34% over 12 months. The prior quarter showed strong recovery: revenue rose to $1.135 billion (up 34.5% year over year) and EPS reached $0.39, reversing a prior-quarter miss. The company launched the Lumex CSS platform and strengthened AI ties with Meta. Royalty revenue increased 21% to $620 million and licensing jumped 56% to $515 million. The stock trades at high multiples (134x trailing, 47x forward), analysts warn on optimistic royalty forecasts, high R&D spend, and unproven new divisions.
Read at 24/7 Wall St.
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