GET DAILY SIGNALSArm Holdings (ARM) Reports +27% Revenue Growth in Fiscal Q2
Key Takeaways
- Arm reported fiscal second-quarter revenue of $1.44 billion, up 27% year over year and above the roughly $1.38 billion analysts expected.
- Adjusted earnings per share (EPS) came in at $0.52, beating the consensus estimate of about $0.48.
- License and other revenue jumped 50% to $773 million, while royalty revenue rose 8% to $670 million.
- Data center royalties more than doubled year over year, reflecting accelerating adoption of Arm-based chips in artificial intelligence (AI) infrastructure.
- The company guided fiscal Q3 revenue to about $1.54 billion and adjusted EPS to roughly $0.56.
- Despite the top-and-bottom-line beat, Arm shares slipped in after-hours trading.
Why Arm's Results Matter in the AI Era
Arm Holdings sits at the center of the AI computing boom, licensing the processor designs that power everything from smartphones to data center servers. This report matters because it tests whether Arm can translate surging demand for power-efficient chips into sustained revenue growth, particularly as cloud providers increasingly build their own custom silicon. Coming off a run that saw the stock rise more than 75% during the year, investors were watching closely to see whether licensing momentum and data center adoption could justify the valuation. The quarter offered evidence that AI infrastructure spending is accelerating Arm's expansion beyond its traditional smartphone royalty base.
Breaking Down the Reported Results
Arm reported revenue of $1.44 billion for its fiscal second quarter ended September 30, 2026, up 27% year over year and ahead of the roughly $1.38 billion consensus forecast. Adjusted EPS of $0.52 exceeded expectations of about $0.48, while GAAP net income was $130 million, or $0.12 per share, down from $0.22 a year earlier.
License and other revenue climbed 50% to $773 million, driven by strong demand for Arm intellectual property and several high-value agreements. Royalty revenue rose 8% to $670 million, helped by higher royalty rates per chip and more Arm-based chips in data centers, partially offset by memory-pricing pressure in the smartphone market. Annualized contract value increased 12% to $1.79 billion. To put these numbers in context, I also checked this using Tickeron’s AI Screener to see how the stock compares to others in the industry.
For the current quarter, Arm guided to revenue of about $1.54 billion and adjusted EPS of roughly $0.56, slightly above the consensus of about $1.53 billion and $0.55.
Market Reaction and Investor Sentiment
Arm's results beat expectations on both revenue and earnings, and its guidance came in slightly above consensus. Yet the stock still fell more than 3% in after-hours trading, following a 5.3% decline during the regular session on a rough day for chip stocks. The muted reaction suggests investors were looking for more than a modest beat, particularly given Arm's rich valuation and the elevated expectations surrounding AI-linked semiconductor names. Slower-than-expected royalty growth relative to some estimates, combined with the lingering overhang of Arm's legal dispute with Qualcomm, likely tempered enthusiasm despite the strong licensing performance.
Forward Outlook and Key Factors to Monitor
The most important story to watch next is Arm's expanding role in data centers. The company said Arm-based server market share at major hyperscalers is on pace to exceed 60% by the end of calendar 2026, up from more than 50% in 2025 and 15% in 2024. Data center royalties doubled year over year, and this trajectory will be central to Arm's growth narrative going forward.
Another key factor is the company's new in-house AGI CPU for data centers. Management reiterated confidence in reaching up to $2 billion in revenue from this chip across fiscal 2027 and 2028, though Chief Executive Rene Haas noted that supply constraints remain a limiting factor. Investors will be watching whether Arm can secure enough manufacturing capacity to meet demand.
Finally, monitor the balance between licensing and royalty revenue. Licensing surged 50% this quarter, but royalties grew more modestly at 8% as smartphone softness partially offset data center gains. Sustained royalty acceleration would signal that Arm's technology is translating into a growing base of shipped chips, a key driver of long-term, recurring revenue.
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Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
ARM in downward trend: 10-day moving average crossed below 50-day moving average on October 16, 2026
The 10-day moving average for ARM crossed bearishly below the 50-day moving average on October 16, 2026. This indicates that the trend has shifted lower and could be considered a sell signal. In 7 of 8 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are 88%.
Technical Analysis (Indicators)
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on October 05, 2026. You may want to consider selling the stock, shorting the stock, or exploring put options on ARM as a result. In 35 of 49 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are 71%.
The Moving Average Convergence Divergence Histogram (MACD) for ARM turned negative on October 07, 2026. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 27 similar instances when the indicator turned negative. In 22 of the 27 cases the stock turned lower in the days that followed. This puts the odds of success at 81%.
ARM moved below its 50-day moving average on October 09, 2026 date and that indicates a change from an upward trend to a downward trend.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where ARM declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 80%.
The Aroon Indicator for ARM entered a downward trend on November 04, 2026. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Bullish Trend Analysis
The RSI Indicator entered the oversold zone -- be on the watch for ARM's price rising or consolidating in the future. That's also the time to consider buying the stock or exploring call options.
The Stochastic Oscillator demonstrated that the ticker has stayed in the oversold zone for 2 days, which means it's wise to expect a price bounce in the near future.
Following a +5.62% 3-day Advance, the price is estimated to grow further. Considering data from situations where ARM advanced for three days, in 182 of 211 cases, the price rose further within the following month. The odds of a continued upward trend are 86%.
ARM may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Fundamental Analysis (Ratings)
The Tickeron SMR rating for this company is 60 (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is 64 (best 1 - 100 worst), indicating fairly steady price growth. ARM’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron PE Growth Rating for this company is 73 (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Valuation Rating of 95 (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: ARM's P/B Ratio (23.736) is very high in comparison to the industry average of (5.869). ARM has a moderately high P/E Ratio (195.714) as compared to the industry average of (16.161). Projected Growth (PEG Ratio) (2.327) is also within normal values, averaging (3.803). Dividend Yield (0.000) settles around the average of (0.012) among similar stocks. P/S Ratio (50.761) is also within normal values, averaging (46.468).
The Tickeron Profit vs. Risk Rating rating for this company is 100 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. ARM’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 78, placing this stock worse than average.
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