Arm Shares Sink Despite Earnings Beat as Smartphone Weakness Weighs

Key Facts

Arm shares tumbled by more than 11% despite reporting a robust 23% increase in revenue and profit. CEO Rene Haas highlighted a stark divergence between the persistent weakness in the smartphone market, which accounts for 46% of royalty income, and the rapid growth in AI data centers. Adding to the sector's momentum, Anthropic and SpaceX have entered a new agreement to secure computing resources, further emphasizing the demand for advanced processing power. While Jefferies raised its price target to $290 citing $2 billion in AI-focused demand, Bank of America analysts warned that AI growth opportunities are already fully priced in. Investors remain focused on Arm's strategic pivot toward high-performance computing to offset cyclical headwinds in its core mobile segment.

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