Just a day after chip giants Nvidia and TSMC saw their stock prices rise, opposite fortunes are affecting competitor Arm Holdings. (September 17, 2024) after the close of the markets, Arm reported its first quarter results for fiscal year 2025, and in premarket trading this morning, its shares (ticker: ARM) have plunged. As of the time of this writing, the stock is currently down over 8%.

Here’s what you need to know about Arm’s results and why its share price is down so much in premarket this morning.

Q1 2025 results

Arm Holdings actually had a pretty good first quarter to their new fiscal year. The company posted $939 million in total revenue for the quarter, an increase of 39% year-over-year. License and other revenue accounted for $472 million of that $939 million, a growth of 72% year-over-year. Royalty revenue accounted for the other $467 million, up 17% year-over-year.

The company also posted an earnings per share of 40 cents.

In a shareholder letter accompanying the earnings report, CEO Rene Haas and CFO Jason Child wrote, “In Q1, we delivered record revenues and exceeded the high-end of our guidance range for both revenue and non-GAAP EPS. License revenue hit a record level as the proliferation of AI everywhere is driving more companies to make broad and long-term commitments to use Arm’s power-efficient technology in their future products.”

If Arm had good Q1 results, why is the stock price down?

A total revenue increase of 39% year-over-year is nothing to sneeze at, so why is Arm’s share price down in premarket trading?

It comes down to the fact that most investors seem to have been disappointed with what Arm says comes next. That is, investors did not like that the company’s earning guidance for the current quarter (Q2 2025) and greater fiscal year remained relatively unchanged, instead of being revised upward based on Q1’s total earnings surge and the boom in the chip market in general thanks to the AI wave sweeping the industry.