Arm shares surge on strong forecast of AI-fuelled chip upgrades
- Arm said its expansion strategy was starting to pay off, with customers flocking to Arm-based processors to complement Nvidia’s chips for AI work in data centres
- For the full year, Arm expects US$3.18 billion in revenue and adjusted earnings of US$1.22 per share, both above analysts’ estimates
Arm surged more than 30 per cent on Wednesday after the British tech company forecast quarterly sales and profit above Wall Street expectations as customers aim to design new chips for artificial intelligence work, generating higher royalties.
The surge in Arm’s stock lifted its market capitalisation by about US$26 billion. Now trading at US$102.11, Arm has doubled from the US$51 price set in its September initial public offering.
The company, uniquely, supplies a library of blueprints to chipmaking rivals. Its majority owner SoftBank Group bet in 2016 that Arm could use its dominant position in smartphones, where it sits at the heart of both Apple and Android devices.
“The solid Arm earnings and, even more importantly, their robust forecasts are good signs for both the company and the tech industry overall,” said Bob O’Donnell, president and chief analyst at TECHnalysis Research.
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 centres, and working on new laptops and smartphones that can handle chatbots and other AI features.