Arm shares jump 50% on AI, China boosts to results

Business news | February 9, 2024

By Peter Clarke

Arm’s share price jumped by 48 percent as the processor IP licensor announced a solid quarter boosted by demand for artificial intelligence processors and a jump in sales to China.

Arm Holdings plc, recently returned to the stock market, announced revenues for the quarter ended December 31, 2023, of US$824 million up 14 percent year-on-year. Sequentially Arm lifted its revenue by 2.2 percent from US$806 million. The non-GAAP net profit was US$338 million up 17 percent y-on-y.

The company’s revenue was broken down as licensing revenue of US$354 million, up by 18 percent y-o-y and royalty revenue of US$470 million, up by 11 percent y-o-y.

Arm processor cores are present in most high-end data center AI chips such as Nvidia’s Grace Hopper, AWS’s Graviton and Microsoft’s Cobalt.

What’s up with China?

“Arm delivered another quarter of record revenues driven by continued adoption of the world’s most pervasive compute platform,” said CEO Rene Haas in a statement. “More customers moving to higher-value Armv9 technology combined with market share gains in cloud server and automotive resulted in strong royalty growth. The AI wave drove licensing growth as these new devices require Arm’s performant and power-efficient compute platform.”

In an analysts phone meeting it was revealed that Arm China, which is now accounted for as Arm Holdings’ largest customer, was responsible for 25 percent of sales in the quarter compared with 20 percent in the previous in quarter.

Arm’s management declined to indicate exactly what was driving its Chinese sales but said the China ecosystem tends to follow the global ecosystem and that AI, automotive and revival of the smartphone market were all relevant.

Arm forecast that its fourth fiscal quarter revenue would be between US$850 million and US$900 million.