Arm Holdings Stock Plummets Over 15% Amid Disappointing Earnings and Weak Guidance

Arm Holdings (ARM -2.68%) faced a brutal sell-off this week, with shares sinking more than 15% following a lukewarm earnings report and analyst downgrades. The semiconductor design company posted 12% year-over-year revenue growth to $1.05 billion in fiscal Q1 2026, driven by a 25% surge in royalty revenue. However, adjusted net income fell to $374 million ($0.35 per share) from $419 million a year prior—meeting profit estimates but narrowly missing revenue expectations.

Investors balked at management's tepid Q2 revenue guidance of $1.01-$1.11 billion, signaling potential stagnation. The market reaction underscores growing skepticism about Arm's ability to maintain growth momentum in the face of slowing semiconductor demand and intensifying competition in chip architecture.