Arm’s Earnings Meet Expectations. Why the Stock Is Falling.

KeyBanc has a $175 price target for shares of Arm Holdings. (Michael M. Santiago/Getty Images)

While Arm Holdings’ earnings for the June quarter matched Wall Street’s expectations, that wasn’t enough for investors. The shares fell in after-hours trading.

The technology company reported earnings per share of 35 cents, in line with the consensus estimate among Wall Street analysts tracked by FactSet. Revenue came in at $1.05 billion, which also matched expectations.

The outlook was also roughly in line. For the current quarter, Arm told investors to expect revenue in a range from $1.01 billion to $1.11 billion, while the average analyst estimate was for $1.06 billion.

“Our Q1 FYE26 results exceeded $1 billion in revenue for the second straight quarter as royalties grew across all target end markets, demonstrating the strength of Arm as the AI platform of choice—from the cloud to the smallest edge devices,” CEO Rene Haas wrote in a letter to investors.

Arm shares fell as much as 8% following the release. Investors likely wanted results that significantly exceeded expectations given the big rally in the stock this year. At Wednesday’s close, Arm stock was up 32% in 2025, compared with the 15% rise for the iShares Semiconductor ETF.

Arm Holdings makes money by licensing its chip designs to semiconductor companies and smartphone makers such as Apple and Qualcomm . Arm’s latest advanced chip technology, called Armv9, generates higher royalty rates than its previous Armv8. It is also making progress in the high-end cloud server processor market by selling chip technology to Microsoft and Nvidia .

On Monday, KeyBanc Capital Markets analyst John Vinh reaffirmed his Overweight rating for Arm stock and reiterated his $175 price target for the shares.

“We expect Arm to post in-line results and guidance,” he wrote. “Positive forces include [near term] upside to iPhone builds, while negative forces include slowing Android smartphone demand in China.”

Write to Tae Kim at tae.kim@barrons.com