Arm Reports 26% Revenue Growth to $1.24 Billion in Q3
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
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Should l Buy ARM?
Source: stocktwits
- Record Revenue: Arm's Q3 revenue surged 26% year-over-year to $1.24 billion, marking a record quarterly revenue and the fourth consecutive billion-dollar revenue quarter, indicating strong demand in AI and data center markets.
- Significant Royalty Growth: The company reported a 27% year-over-year increase in royalty revenue to $737 million, driven by expansion in target markets such as AI, smartphones, and edge computing, reflecting the growing scale of Arm's ecosystem.
- Rising Operating Expenses: Despite strong revenue performance, Arm's adjusted operating expenses reached $716 million, a 37% increase from the previous year, raising investor concerns and leading to an over 8% drop in stock price during after-hours trading.
- Optimistic Outlook: Arm expects Q4 revenue to range between $1.42 billion and $1.52 billion, with an average analyst expectation of $1.44 billion, demonstrating confidence in future growth, although projected earnings per share are slightly below analyst forecasts.
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Analyst Views on ARM
Wall Street analysts forecast ARM stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for ARM is 173.44 USD with a low forecast of 120.00 USD and a high forecast of 215.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
20 Analyst Rating
14 Buy
4 Hold
2 Sell
Moderate Buy
Current: 104.550
Low
120.00
Averages
173.44
High
215.00
Current: 104.550
Low
120.00
Averages
173.44
High
215.00
About ARM
Arm Holdings plc is engaged in operating a global computing platform. It architects, develops, and licenses high-performance and energy-efficient Arm compute platforms. The Company’s principal operations and activities are the licensing, marketing, research and development of central processing unit (CPU) design intellectual property (IP), graphics processors, system IP, market optimized platform IP, and associated software, tools and other related services. Its complementary products include GPU and NPU accelerators, interconnect, and others. Its primary product offerings are CPU products that address diverse performance, power, and cost requirements. It offers a family of GPU and NPU products providing efficient computing acceleration and an optimal visual experience across a wide range of devices. Its CPU, GPU, and System IP products integrated into a foundational compute platform optimized for a specific end market.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Arm Reports 26% Revenue Growth to $1.24 Billion in Q3
- Record Revenue: Arm's Q3 revenue surged 26% year-over-year to $1.24 billion, marking a record quarterly revenue and the fourth consecutive billion-dollar revenue quarter, indicating strong demand in AI and data center markets.
- Significant Royalty Growth: The company reported a 27% year-over-year increase in royalty revenue to $737 million, driven by expansion in target markets such as AI, smartphones, and edge computing, reflecting the growing scale of Arm's ecosystem.
- Rising Operating Expenses: Despite strong revenue performance, Arm's adjusted operating expenses reached $716 million, a 37% increase from the previous year, raising investor concerns and leading to an over 8% drop in stock price during after-hours trading.
- Optimistic Outlook: Arm expects Q4 revenue to range between $1.42 billion and $1.52 billion, with an average analyst expectation of $1.44 billion, demonstrating confidence in future growth, although projected earnings per share are slightly below analyst forecasts.
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Arm Holdings Q3 Earnings Exceed Expectations
- Strong Financial Results: Arm Holdings reported Q3 fiscal 2026 revenue of $1.24 billion, exceeding analyst expectations of $1.22 billion, with a year-over-year growth of 26%, indicating robust demand in AI and data center markets.
- Improved Profitability: The adjusted earnings per share reached $0.43, surpassing the expected $0.41, reflecting effective strategies in cost control and market expansion, which further bolstered investor confidence.
- Solid Cash Flow: The company generated $365 million in operating cash flow and $169 million in adjusted free cash flow during the quarter, ending with $3.54 billion in cash and short-term investments, providing ample funding for future investments.
- Optimistic Outlook: Arm expects Q4 revenue between $1.42 billion and $1.52 billion, slightly above the market estimate of $1.44 billion, demonstrating management's confidence in future growth, which is likely to drive stock price recovery.
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Arm Holdings Posts Record Profits, Yet Stock Prices Decline.
- Company Overview: Arm Holdings is a British semiconductor and software design company.
- Financial Performance: The company reported earnings, revenue, and royalty revenue for the December quarter that exceeded Wall Street's expectations.
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Arm Holdings Q3 Earnings Exceed Expectations
- Strong Performance: Arm Holdings reported a Q3 non-GAAP EPS of $0.43, beating expectations by $0.02, indicating a sustained enhancement in profitability and reflecting the company's competitive position in the market.
- Revenue Growth: The company achieved revenue of $1.24 billion, a 26.1% year-over-year increase, exceeding market expectations by $10 million, demonstrating significant improvement in financial performance driven by widespread adoption of Arm technology.
- Royalty Revenue Surge: Royalty revenue increased by 27% year-over-year to $737 million, primarily due to the rising adoption of Armv9 architecture and Arm CSS, highlighting strong demand in the data center sector.
- Increased Contract Value: Annualized contract value rose by 28% year-over-year to $1.62 billion, indicating success in high-value licensing agreements, while remaining performance obligations decreased by 8%, with an expectation to recognize approximately 31% of this revenue in the next 12 months.
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Arm Reports 26% Revenue Growth to $1.24 Billion in Q3
- Record Revenue: Arm's Q3 revenue surged 26% year-over-year to $1.24 billion, marking a record quarterly revenue and the fourth consecutive billion-dollar revenue quarter, indicating strong demand in AI and data center markets.
- Significant Royalty Growth: The company reported a 27% year-over-year increase in royalty revenue to $737 million, driven by expansion in target markets such as AI, smartphones, and edge computing, reflecting the growing scale of Arm's ecosystem.
- Rising Operating Expenses: Despite strong revenue performance, Arm's adjusted operating expenses reached $716 million, a 37% increase from the previous year, raising investor concerns and leading to an over 8% drop in stock price during after-hours trading.
- Optimistic Outlook: Arm expects Q4 revenue to range between $1.42 billion and $1.52 billion, with an average analyst expectation of $1.44 billion, demonstrating confidence in future growth, although projected earnings per share are slightly below analyst forecasts.
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- Align Technology's Impressive Results: Align Technology reported fourth-quarter earnings of $3.29 per share, exceeding the LSEG consensus estimate of $2.97, with revenue of $1.05 billion also surpassing expectations, resulting in a stock surge of over 11%.
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Arm Holdings Q3 Earnings Exceed Expectations
- Strong Financial Results: Arm Holdings reported Q3 fiscal 2026 revenue of $1.24 billion, exceeding analyst expectations of $1.22 billion, with a year-over-year growth of 26%, indicating robust demand in AI and data center markets.
- Improved Profitability: The adjusted earnings per share reached $0.43, surpassing the expected $0.41, reflecting effective strategies in cost control and market expansion, which further bolstered investor confidence.
- Solid Cash Flow: The company generated $365 million in operating cash flow and $169 million in adjusted free cash flow during the quarter, ending with $3.54 billion in cash and short-term investments, providing ample funding for future investments.
- Optimistic Outlook: Arm expects Q4 revenue between $1.42 billion and $1.52 billion, slightly above the market estimate of $1.44 billion, demonstrating management's confidence in future growth, which is likely to drive stock price recovery.
See More
Arm Holdings Posts Record Profits, Yet Stock Prices Decline.
- Company Overview: Arm Holdings is a British semiconductor and software design company.
- Financial Performance: The company reported earnings, revenue, and royalty revenue for the December quarter that exceeded Wall Street's expectations.
See More
Arm Holdings Q3 Earnings Exceed Expectations
- Strong Performance: Arm Holdings reported a Q3 non-GAAP EPS of $0.43, beating expectations by $0.02, indicating a sustained enhancement in profitability and reflecting the company's competitive position in the market.
- Revenue Growth: The company achieved revenue of $1.24 billion, a 26.1% year-over-year increase, exceeding market expectations by $10 million, demonstrating significant improvement in financial performance driven by widespread adoption of Arm technology.
- Royalty Revenue Surge: Royalty revenue increased by 27% year-over-year to $737 million, primarily due to the rising adoption of Armv9 architecture and Arm CSS, highlighting strong demand in the data center sector.
- Increased Contract Value: Annualized contract value rose by 28% year-over-year to $1.62 billion, indicating success in high-value licensing agreements, while remaining performance obligations decreased by 8%, with an expectation to recognize approximately 31% of this revenue in the next 12 months.
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- Stock Market Trends: Stock futures showed a mostly higher trend on Wednesday after a recent selloff.
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