The microprocessor designer Arm has soared up to 64% on the stock market at the opening of this Thursday's session on the stock market. Investors celebrate that the company raised its earnings forecasts this Wednesday after the market closed in the heat of demand for microprocessors due to the rise of artificial intelligence. The company's shares, which went public at a price of $51 per share, have reached a maximum of $126.58 per share, with which they had appreciated around 148% in just under five months. The company controlled by Softbank already has a valuation of about 130,000 million dollars (about 120,000 million euros) on the stock market.
Shares soared more than 40% on Wednesday outside of the usual session hours. With the opening of the Nasdaq session, the gain began to be somewhat more moderate, but then the shares skyrocketed. The shares of the Japanese group Softbank, which still controls 90% of the capital, have soared 11% this Thursday thanks to the revaluation of the subsidiary that it placed on the market in the largest IPO in two years.
The company achieved revenue of $824 million in the third quarter of its fiscal year, 14% more than the previous year, as communicated on Wednesday to the United States Securities and Exchange Commission (the SEC). Rights revenue grew 11% to a record $470 million, driven by the recovery of the semiconductor industry and the most advanced chips. License billing grew by 18%, up to $354 million, figures much better than expected, due to the strong demand for computing capacity derived from the boom in investment in artificial intelligence.
Those are the magic words for investors: artificial intelligence. The new technology is what has allowed Arm to raise its revenue forecasts for the entire year (which, in its case, closes in March) from the range of 2,960-3,080 million dollars to 3,155-3,205 million. At the same time, it also cuts the forecast for operating expenses from around 1,765 to around 1,700 million. Thanks to this, the earnings per share forecast goes from 1.00-1.10 dollars to 1.20-1.24, which represents an increase of 16% at the midpoint of the range. The improvement in forecasts for the year as a whole is consistent with another improvement in estimates for the fourth quarter of the fiscal year, the current one, in which the company expects an earnings per share of 28 to 32 cents, above the range previous from 21 to 28 cents.
“We feel very, very strongly positioned for growth,” explained the company's CEO, Rene Haas, in a conference with analysts in which the acronyms of artificial intelligence were pronounced thirty times. “Arm delivered another quarter of record revenue driven by continued adoption of the world's most ubiquitous computing platform,” he stated. “The AI wave drove licensing growth as these new devices require Arm's performance and power-efficient computing platform,” he added.
“Arm technology is increasingly being used in chips. And as the amount of Arm technology in chips increases, so does the royalty rate. About 35% of Arm's total rights revenue comes from smartphones, so we have benefited from the recovery of the smartphone market. But with 65% coming from markets beyond mobile, we are seeing more revenue growth from share gains and market share growth outside of mobile,” CFO Jason Child explained at the same conference.
Haas and Child explained that customers are adopting a new version of their technology called V9, which carries twice the usage rights of its predecessors. Microsoft's new server chips are also using more Arm computing cores. The company is also gaining share in other sectors. “We are seeing an increase in market share for our products in general, particularly around automotive and data center infrastructure,” said Haas, who also allayed a geographic concern: “In China, the growth is very well,” he assured.
Arm's microprocessor designs are used by large companies in the sector to produce chips. Apple, Intel, AMD, Nvidia and Qualcomm, among others, take advantage of the British technology company's designs to develop their products. Arm processors (CPUs) run the vast majority of the world's software, including operating systems and applications for smartphones, tablets and personal computers, data center and networking equipment, and vehicles, as well as operating systems embedded in devices. such as digital clocks, thermostats, drones and industrial robotics. Arm designs custom chips and earns a percentage of intellectual property.
The company is moving into segments that are still booming, such as cloud computing and smart cars. It has begun offering to take designs directly to the manufacturing phase, a system focused on less specialized clients, such as cloud computing firms.
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