arm arm Beyond guidance and fact set consensus, we reported an adjusted EPS of $0.55 this quarter. The next quarter guidance was weaker than expected, but was $1 billion to $1.1 billion and $0.38 adjusted EPS of $1.09 billion and $0.38, respectively, at $0.42 per share, $1.09 billion and $0.42, respectively.
Why it matters: Known outlook and management have shut down 2026 guidance due to tariff uncertainty, bringing stocks down 10% in aftermarket trading.
Despite the weak outlook, management has provided some directional guidance, with the first half of the year expected to be softer with continuous revenue growth of 10%-15% in the second half. This should increase revenues for 2026 by approximately 20%.
The adjusted EPS for 2026 is expected to have a revenue growth of 18% and $1.86, with a strong increase in royalty revenues based on an increase in loyalty rates and market share. Smartphones, data centers and car revenues continue to grow in healthy double digits.
Conclusion: Maintain a fair value estimate of $73. ARM Holdings is growing slowly to a valuation, but it believes its stock is effectively overvalued. Our fair value estimates represent a 39x adjusted forward P/E ratio.
Key Statistics: The revenue of the V9, which also includes the Neoverse Compute subsystem, jumped to over 30% of its loyalty revenue after a quarter packed at around 25%. ARM added 13 total access licenses to a total of 44 this year. Six additions were added from smartphone clients, six from data center clients, and one from automotive clients.
ARM’s customs duties exposure is indirect. With 10% to 20% of royalty revenue coming from the US, a decrease in client shipments due to tariff uncertainty could lead to a decline in royalty revenue.
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