Arm Holdings’ Stock Falls 9% On Disappointing Outlook

Arm Holdings’ (ARM) stock is down 9% after the British chipmaker issued forward guidance that disappointed Wall Street.The company reported fiscal fourth-quarter earnings per share (EPS) of $0.55 U.S., which beat the consensus estimate of $0.52 U.S. Revenue in the period totaled $1.24 billion U.S., which was slightly ahead of the $1.23 billion U.S. that was forecast on Wall Street. It was the first time in the company’s 35-year history that its quarterly revenue surpassed $1 billion U.S.Despite the decent print, Arm’s stock is falling after management provided a disappointing outlook for the current quarter, saying they expect sales of $1.05 billion U.S. That was below the $1.10 billion U.S. that analysts had penciled in for the company, sending its share price down almost 10%.Arm is different than other chipmakers in that it makes money by licensing its chip designs to semiconductor companies and smartphone makers such as Apple (AAPL).The company’s most advanced chip called “Armv9” generates higher royalty rates than previous microchips and processors.Until now, Arm appeared to be weathering the tariff volatility better than its American peers and rivals. Many analysts had been optimistic that Arm’s core customer base would remain steady despite uncertainty caused by tariffs and trade wars. But now, Arm’s management team says they had to lower their sales guidance as the business outlook for the remainder of the year has been clouded by potential tariff impacts.Prior to today (May 8), Arm’s stock had declined 3% on the year to trade at $124.19 U.S. a share in New York.