New York, Feb 5, 2026, 05:00 EST — Premarket
- Shares of Arm Holdings, listed in the U.S., tumbled over 7% in premarket action following the company’s quarterly update late Wednesday.
- Investors focused on the weaker-than-anticipated licensing sales, despite gains in both royalty and total revenue.
- Traders are digesting management’s remarks about a memory chip shortage that might limit royalties from smartphones.
Arm Holdings’ U.S.-listed shares dropped over 7% in premarket trading Thursday, as its quarterly report didn’t ease concerns about some segments of its revenue mix. The stock had closed at $104.90.
The drop is significant since Arm now serves as a high-beta indicator for two volatile markets: smartphones and data-center AI. When Arm’s shares shift, chip stocks linked to those spending cycles often follow suit.
This also tests how much investors value growth delivered in two parts. Arm first pockets upfront fees from licensing deals, then pulls in royalties — a slice per chip — as those designs roll out in phones, servers, or other gadgets.
Arm’s latest figures made the split crystal clear. Licensing revenue came in at $505 million, missing analysts’ $519.9 million target, even as the company projected fourth-quarter revenue around $1.47 billion—beating Wall Street’s expectations, Reuters reported. “The miss in licensing revenue … (led) to the fall in shares,” said Kinngai Chan, senior research analyst at Summit Insights. He also flagged rising memory costs in smartphones as “a headwind for Arm.” Reuters
The smartphone outlook darkened overnight. Arm’s Chief Financial Officer Jason Child warned royalty revenue might drop up to 2% in the next year, citing memory shortages that are dragging down mobile processor sales, Reuters reported. Qualcomm CEO Cristiano Amon, whose company relies heavily on Arm for smartphone chips, noted on a post-earnings call that “the whole sector is impacted by memory.” Reuters
Arm announced it released a shareholder letter alongside its fiscal third-quarter results and intends to file it with the U.S. Securities and Exchange Commission on Form 6‑K. The company also held an audio webcast on Feb. 4 to go over the quarter.
Arm has scheduled an “Arm Everywhere” event for March 24, taking place at San Francisco’s Fort Mason Center for Arts & Culture. The event runs from 10:00 a.m. to 4:30 p.m. Pacific time and will also be streamed live online. Arm Newsroom
The risk is clear-cut. If the memory shortage persists and handset inventories remain tight, royalty growth could stall, making licensing deals tricky to schedule — a tough scenario for investors focused on quarterly moves.
Thursday’s session kicks off with a key question: will the post-earnings selloff ease up or extend across the chip sector? After that, focus turns to March 24, when Arm reveals what it will — and won’t — unveil at its Arm Everywhere event.
Related articles: NASDAQ:QCOM
