By Asa Fitch

Chip-design giant Arm Holdings reported record quarterly sales on the back of a rush of artificial-intelligence chip buying but gave an outlook that disappointed investors, sending its shares down.

In a shareholder letter, Arm's top executives said AI was driving strong demand for Arm-based chips, citing new developments in hardware and small but powerful language models that make AI more viable on personal computers, smartphones and cars.

The company's $983 million of sales in its latest quarter were better than the $939 million analysts expected in a FactSet survey. But its forecast of between $1.175 billion and $1.275 billion in revenue for its current quarter was about in line with an analyst projection of $1.221 billion.

After closing up 6.8% Wednesday, Arm's shares fell more than 6% in after-hours trading.

Arm's basic circuit architecture is inside nearly all of the world's smartphones, but its technology has spread rapidly into other arenas in recent years. Arm-based chips for personal computers, servers and a wide variety of other electronic devices have proliferated. Nvidia, the leader in AI chips, is using an Arm-based central processing unit in some of its most powerful AI hardware.

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February 05, 2025 17:35 ET (22:35 GMT)

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