Arm Holdings Plc (NASDAQ:ARM) shares are surging Thursday after the chip architecture company delivered a record first quarter that cleared Wall Street’s expectations on every major metric and issued second-quarter guidance with its midpoint comfortably above consensus.
- ARM Holdings stock is showing exceptional strength. Why are ARM shares rallying?
Arm Posts Record Q1
Arm earned 45 cents per share in the three months ended June, beating the 40 cent consensus by 12.5% while total revenue of $1.29 billion edged past the $1.26 billion the Street had been modeling.
The standout number inside the report was data center royalties, which more than doubled from the same period a year ago and helped push total royalty revenue up 22% to $715 million, a figure that captures how thoroughly cloud operators have embraced computing built on Arm’s architecture.
CEO Rene Haas described the period as a record first quarter and attributed the performance to deepening penetration of the Arm platform across cloud infrastructure, connected devices and an expanding set of physical world AI applications.
Q2 Guidance Comes in Above Estimates
For the second quarter, Arm guided adjusted earnings per share to a range of 43 cents to 51 cents, versus the 43 cent analyst estimate with a midpoint that sits meaningfully above what the Street had penciled in.
Revenue guidance of $1.33 billion to $1.48 billion also straddles the $1.34 billion consensus with the top end implying a step up in growth that would suggest the momentum from the first quarter is carrying forward.
Current Setup and Indicators for ARM
Even with Thursday’s bounce, the intermediate setup is still choppy. The stock is 15.9% below the 20‑day SMA and 26.9% below the 50‑day SMA, while sitting 4.1% under the 100‑day SMA. Zoom out and the longer trend remains intact since Arm is still about 25% above the 200‑day SMA, a reminder that the broader uptrend is bruised but not broken.
Momentum hasn’t turned yet. MACD is below its signal line and the histogram is negative, which shows upside pressure fading compared with the prior upswing. That tells the market rallies can still happen, but they need real follow‑through because buyers have to rebuild momentum instead of relying on strength from the sector.
The moving‑average structure is mixed. The 20‑day SMA is below the 50‑day, which is bearish in the near term, while the 50‑day remains above the 200‑day after the April golden cross, which keeps the longer‑term backdrop constructive. The June swing high and May swing low frame the current move as a rebound inside a wider range, more work in progress than clean breakout.
- Key resistance: $237.50 — A nearby pivot where rebounds can stall as price pushes into that zone after the sharp drop from the 20‑day and 50‑day area
- Key support: $201.00 — A nearby floor closer to the 200‑day trend area and a prior demand zone where buyers previously stepped in
Analyst Sentiment Holds Steady as Targets Come Down
Following the earnings report, analysts remain constructive, but they’re not ignoring the recent wave of trimmed targets. The stock holds a Buy rating with an average price forecast of $311.22, and the latest moves reflect a more measured tone.
RBC Capital kept its Outperform rating while cutting its target to $340.00, TD Cowen reiterated Buy while lowering its target to $350.00 and Wells Fargo maintained Overweight while reducing its target to $280.00. The takeaway is simple: still bullish, but with expectations tightened.
ARM Shares Are Soaring
ARM Price Action: Arm shares were up 6.45% at $239.40 at the time of publication on Thursday, according to Benzinga Pro.
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