Shares of Arm plunge 8% after licensing revenue misses estimates, Qualcomm outlook adds pressure

Core Insights - ARM's fiscal third-quarter licensing revenue increased by 25% year-over-year to $505 million, but fell short of analyst expectations by 2.9% [2] - The company reported record quarterly revenue of $1.242 billion for the last three months of 2025, driven by demand for artificial intelligence, surpassing LSEG SmartEstimates by 1.54% [3] - ARM's stock experienced a decline of 8% in late trading, influenced by Qualcomm's disappointing forecast and the overall tech market pressures [2][5] Financial Performance - ARM's licensing revenue for the third quarter was $505 million, which was below the expected $519.9 million [2] - The total revenue for ARM reached $1.242 billion, marking a significant increase attributed to AI demand [3] Market Context - Qualcomm's fiscal first-quarter results exceeded expectations, but its forecast was negatively impacted by a global memory shortage, leading to a 9.68% drop in its shares [1] - ARM's reliance on royalties from consumer products, particularly smartphones, poses a risk if production declines due to memory shortages [4] - ARM's shares have decreased by 4% year-to-date amid broader tech market pressures [5] Strategic Direction - ARM is attempting to diversify into AI chips for data centers and servers, although the success of this strategy remains uncertain [4]