Arm stock soars 40% on a solid Q4 and impressive guidance

Arm Holdings PLC (NASDAQ: ARM) rallied a whopping 40% in extended hours on Wednesday after reporting blockbuster earnings for its third financial quarter.

Arm stock up on upbeat guidance

The stock is being rewarded also because the chip design company issued impressive guidance on strong demand for artificial intelligence.

Arm Holdings now forecasts its revenue to fall between $850 million and $900 million in Q4 on up to 32 cents of per-share earnings. Analysts, in comparison, were at $780 million and 21 cents a share, respectively. Rene Haas – its chief executive said in a letter to shareholders today:

Note that Arm chips power almost every smartphone in the world. Apple, Nvidia, Google, and Microsoft are among its notable customers. Arm stock is now up well over 100% versus its low in late October.

Notable figures in Arm Q3 earnings release

• Earned $87 million versus the year-ago $182 million
• Per-share earnings also narrowed from 18 cents to 8 cents
• Adjusted EPS printed at 29 cents as per the press release
• Revenue jumped 14% year-over-year to $824 million
• Consensus was 25 cents a share on $761 million in revenue

Arm stock is up on annualised growth of 11% in the company's royalty revenue as well while licensing and other revenues went up 18% in its third quarter. CEO Haas also said on Wednesday: