Chip designer Arm’s shares plunge 8% after disappointing revenue guidance

Shares of British chip designer Arm fell 8.22% in premarket trading on Thursday, as disappointing revenue guidance clouded a positive sales quarter driven by demand for artificial intelligence applications.

Arm reported fourth-quarter revenue of $928 million Wednesday, marking a 47% year-over-year rise.

Performance was driven by Arm’s licensing business, which grew 60% to $414 million in the quarter. The firm cited “multiple high-value license agreements being signed” for AI chips.

Arm’s royalty revenues, meanwhile, grew 37% year-over-year to $514 million, with the company citing increasing penetration of its recently introduced Armv9-based chips.

But it was Arm’s guidance that spooked investors. Arm said it expects 2025 fiscal first-quarter sales of $875 million to $925 million, lower than estimates.

For the 2025 fiscal year, Arm expects revenue to come in between $3.8 billion and $4.1 billion. Analysts were expecting full-year 2025 revenue of $4 billion.

— This is a developing news story and will be updated shortly.