Arm Holdings Inc (ARM) delivered a record-breaking fiscal fourth quarter, easily surpassing Wall Street estimates with adjusted earnings of 60 cents per share on $1.49 billion in revenue. The results reflected a 20% year-on-year revenue jump, fueled by surging AI-integrated hardware demand and a massive shift from mobile dominance to data center ubiquity.
However, the stock erased a 13% after-hours gain within hours after CEO Rene Haas revealed on the earnings call that the company had secured capacity for only half of the demand for its new AGI CPU. While customer demand has already climbed to more than $2 billion across fiscal 2027 and 2028, Arm has locked in supply for roughly $1 billion, leaving the remaining upside contingent on future capacity negotiations.
The bullish guidance for the next quarter—40 cents per share on $1.25 billion in revenue—was overshadowed by the supply caveat. Investors, who had priced the stock at about 100 times forward earnings and driven a 91% year-to-date rally, interpreted the half-secured demand as a bottleneck that could slow the ambitious ramp into a capital-intensive chip business.
Under the hood, the revenue mix remained attractive: $671 million in royalty revenue and $819 million in licensing fees showcased a high-margin, diversified model. The accelerating adoption of the v9 architecture, which commands roughly double the royalty rates, continues to reinforce Arm’s role as a toll booth for global AI infrastructure. Yet the overnight reversal proved that for a stock trading at such rarefied multiples, even a strong beat leaves no room for supply-side doubt.
