2024-02-08 16:43:00
Chip design company Arm reported revenue of $824 million in the fourth quarter, well above analysts’ expectations for revenue of $762 million. The profit per share was also above expectations and stood at 29 cents, compared to the expectation of 25 cents. The enthusiasm, however, comes, of course, from the direction of artificial intelligence and the forecast of future revenues.
The company’s forecast for the first quarter is particularly impressive – the company expects revenues of between 850-900 million dollars. The expectation on Wall Street is for 779 million dollars.
“The AI wave pushed the growth in the licenses granted when the devices in the industry need the chips that ARM knows how to produce,” said the company’s CEO, Rene Haas. In 2024 the company as a whole expects revenues of between 3.15-3.2 billion dollars, compared to the previous forecast which published according to which the expected revenues were between 2.96-3.08 billion dollars. Also in the profit line, the company improved its forecast from a range of 1-1.1 dollars per share to a range of 1.2-1.24 dollars per share. The new forecast is far above the analysts’ forecasts which stand for a profit of 1.06 dollars per share and revenues of 3 billion dollars.
The dominance of Arm’s chip designs in the smartphone market is proving strong as the company reported that revenues from the mobile phone segment returned to strong growth in the December quarter. However, the company also noted the use of its technology in areas such as supercomputers powered by Nvidia’s chips and cloud servers from Microsoft.
“Arm seems to be at the heart of the most sought-after technological industry: artificial intelligence, whether in servers, personal computers, or smartphones. It seems today that almost every company claims to be an artificial intelligence company and probably most of them really are, on some level, but it is still unclear Which one will earn free cash flow. Most people have come to the conclusion that Nvidia will (and did) and of course the various cloud providers. Now we know about another company,” wrote Guggenheim analyst John Depucci.
The future looks promising
Wells Fargo stated in their recommendation from two months ago that they believe ARM will generate about 13% top line growth, following future licensing deals. According to estimates, revenue growth will further accelerate in 2025 following a recovery in the chip industry as well as higher royalty rates.
“Arm is expected to continue to gain market share in data centers, networks and vehicles, benefiting from its energy efficiency, ecosystem and customization capabilities,” wrote KeyBanc analyst John Winn. Wynn raised his price target for the company’s stock to $120 from $75 with an “overweight” rating.
ARM also stated that it is taking market share in the cloud field, when in the investors’ call reference was made to a specific project of Nvidia in the framework of which it is building a data center based on Nvidia’s GH2002 AI chip, which has ARM technology. In addition, the company stated that it sees a trend of transition among its customers to the use of ARM9 technology, which introduces double royalties compared to ARM8. “Key players in the industry such as DELL DELL TECHNOLOGIES INC +1.15% Close:0 Open:83.61 High:85 Low:83.51 Cycle:– Page Quote News Graphs Company profile Recommendations Additional articles on the subject: , HP HP +0.97% Close:0 Opening: 28.03 High: 28.24 Low: 27.93 Cycle:– To page Quote News Graphs Company Profile Recommendations Additional articles on the subject: Lenovo LENOVO GROUP LTD ADR -0.05% Close: 0 Open: 20.89 High: 20.92 Low: 20.78 Cycle:– To page Quote News Graphs Company profile Recommendations for additional articles on the subject: using the GH200 chip to solve some of the most complex computing problems,” stated the company’s management.
ARM does not produce chips itself, but is responsible for their design, with its business model based on selling licenses to use these designs, which serve as the basis for systems produced by other companies. The company has five large customers, which make up over 50% of the revenues: QUALCOMM QUALCOMM INC +1.51% Close:0 Open:146.85 High:148.58 Low:146.3 Turnover:– Page Quote News Graphs Company Profile Recommendations Additional articles on the subject: , Apple, Nvidia , AMD and Broadcom BROADCOM INC +2.68% Close:0 Open:1,267 High:1,295.97 Low:1,265.01 Turnover:– Page Quote News Graphs Company Profile Recommendations More articles on the subject: .
success story
IPO ARM ARM HOLDINGS +58.68% Close:0 Open:94 High:126.59 Low:94 Turnover:– Page Quote News Graphs Company Profile Recommendations More articles on the subject: It is a success story, especially for Softbank which owns 90% of it. The Japanese bank purchased the company in 2016 in exchange for 32 billion dollars and tried to sell it to NVIDIA NVIDIA COR +0.24% Close:0 Open:700.33 High:707.94 Low:694.55 Turnover:– Page Quote News Graphs Company Profile Recommendations More articles on the subject: in 2022 for 40 billion dollars, but without success. The company returned to the markets last September when it was issued at a price of $51 per share. Since then, the stock has almost doubled and its market value today is close to 80 billion dollars. He did not see a return for Softbank, and a missed opportunity for Nvidia.
Arm’s stock has already jumped by 60% since the beginning of the year and trades at a value of 124.3 billion dollars.
Arm stock before today’s spike
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#Arm #stock #jumps