To The Moon

$ARM Holdings(ARM)$ is expected tp release its fiscal Q4 2025 earnings report, which covers the quarter ending 31 March 2025 on 07 May 2025 (Wednesday) after the market close.

Revenue: Around $1.225 billion to $1.23 billion, aligning closely with the midpoint of Arm's own guidance.

Adjusted EPS: Around $0.34 to $0.35. Note: This consensus is notably lower than the company's own guidance range ($0.48-$0.56). It will be important to see which figure the actual results align more closely with.

Arm Holdings (ARM) Last Positive Earnings Call Saw Share Price Decline Significantly By 35.56%

ARM had a positive earnings call but the share price had since declined significantly by 35.56%.

Arm demonstrated strong financial performance with record revenues and growth in key areas, particularly in AI and data centers. However, challenges such as flat Armv9 contribution and increased operating costs present areas of concern.

Arm Holdings (ARM) Guidance

In the recent fiscal 2025 Q3 earnings call, Arm reported record revenues, with total revenue reaching $983 million, marking a 19% year-on-year growth, and royalty revenue hitting a record $580 million, up 23% year-on-year. The company's strong performance was driven by increased adoption of Armv9 technology and Compute Subsystems (CSS), especially in smartphones, data centers, and IoT devices. The call also highlighted Arm's strategic investments in AI and CSS, with expectations to continue this trend into fiscal 2026. For the upcoming Q4, Arm provided guidance for revenue between $1.175 billion and $1.275 billion, representing a 32% year-on-year growth at the midpoint.

Additionally, for the full fiscal year, Arm expects total revenue to reach approximately $4 billion, with a royalty revenue growth rate in the high-teens and license revenue expected to grow around 30% year-on-year. Non-GAAP operating expenses are projected to be about $2.1 billion, reflecting a 21% increase, and non-GAAP EPS is anticipated to be between $1.56 and $1.64.

Key Factors to Watch For Arm Holdings (ARM) Q4 2025

Arm reported record total revenue of $983 million for Q3, a 19% year-on-year increase, and record royalty revenue of $580 million, up 23% year-on-year, exceeding expectations.

AI Momentum: Arm's role in powering AI applications, from data centers to edge devices, remains a central theme. Investors will look for commentary on demand trends and market share gains, particularly in the cloud and data center space where Arm aims to significantly increase its presence.

There was strong adoption of Armv9 and CSS technologies across all end-markets, including smartphones, data centers, networking, and automotive, contributing significantly to revenue growth.

Arm gained market share in the data center with AWS Graviton, Microsoft Cobalt, Google Axion, and NVIDIA's Grace ARM-based chips. Notable projects include NVIDIA's Project DIGITS and Stargate with OpenAI and SoftBank.

Royalty Revenue: Strong growth in royalty revenue is expected, driven by the increasing adoption of the higher-royalty Armv9 architecture, especially in smartphones and servers used for AI workloads.

Licensing Revenue: While potentially more variable quarter-to-quarter ("lumpy"), strong licensing deals indicate long-term partner commitments to Arm's technology for future products, including AI chips.

Armv9 adoption as a percentage of total royalties remained flat at 25% for several quarters, not meeting initial expectations of a 5% increase each quarter.

Annualized contract value (ACV) growth slowed to 9% year-on-year, below recent run rates, though above long-term expectations.

Full-Year Outlook: Beyond the Q4 results, the guidance Arm provides for fiscal year 2026 (starting April 1, 2025) will be critical for market sentiment.

Non-GAAP operating expenses reached a high of $522 million in Q3, driven by increased R&D investments, with expectations of further increases to $590 million in Q4.

For Q4, Arm expects revenue between $1.175 billion and $1.275 billion, representing a 32% year-on-year growth at the midpoint. Full-year revenue is expected to grow by about 24% year-on-year.

Arm Holdings (ARM) Price Target

Based on 30 analysts from Tiger Brokers offering 12 month price targets for ARM Holdings PLC ADR in the last 3 months. The average price target is $149.54 with a high forecast of $225.00 and a low forecast of $75.34. The average price target represents a 33.49% change from the last price of $111.65.

Based on the company guidance given in February 2025 when Arm reported its Q3 results, we are seeing Revenue: $1.175 billion to $1.275 billion (midpoint: $1.225 billion). This suggests significant year-over-year growth between 27% and 37%. Adjusted Earnings Per Share (EPS): $0.48 to $0.56 (midpoint: $0.52). This implies substantial year-over-year growth of 33% to 55%.

Technical Analysis - Exponential Moving Average (EMA)

If we looked at how ARM stock have experienced significant volatility and a large run-up previously. After the Q3 report, the stock dipped slightly because Q4 guidance, while strong, only met (did not significantly beat) already high analyst expectations at that time.

Given the current high valuation, meeting or exceeding its own robust Q4 guidance (especially the higher EPS range) and providing a positive outlook will likely be key.

ARM bears are in control and ARM have not been able to clear the 50-day and 200-day level, though we are seeing RSI picking up momentum, but that might not be enough, as market is having pretty high expectations on ARM, that could cause the share price to behave either direction in volatile tradig.

I would think we might need to watch how the semiconductor sector is performing this week and before ARM earnings.

Summary

Analysts expect Arm to report strong year-over-year revenue growth in Q4, largely in line with the company's guidance midpoint. There appears to be a discrepancy between the current analyst consensus for EPS ($0.34-$0.35) and the company's much higher guidance ($0.48-$0.56).

I think we need to watch out for the company's guidance, commentary on AI-driven demand, Armv9 adoption, and the outlook for fiscal 2026. To me, these are crucial elements to watch for the earnings report coming out on 07 May 2025.

Appreciate if you could share your thoughts in the comment section whether you think ARM could beat the estimates and provided a strong guidance this time.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.