Shares of Arm plunge 8% after licensing revenue misses estimates, Qualcomm outlook adds pressure

Shares of UK-based semiconductor designer Arm Holders It fell 7.48% in after-hours trading Wednesday after the company’s licensing revenue beat Wall Street estimates.

Arm’s fiscal third-quarter licensing revenue rose 25% from a year earlier to $505 million, but was 2.9% below the $519.9 million expected by analysts surveyed by FactSet.

“ARM fell -8% in recent trading after its guidance made only slight progress; this was not helped by negative readings from Qualcomm’s after-hours figures, given that ARM chip designs are heavily used in smartphones,” said Andrew Jackson of Ortus Advisors.

shares Qualcomm it also fell 9.68% after hours on Wednesday. While the company’s first-quarter financial results beat expectations, its forecast disappointed due to global memory shortage.

Despite missing Wall Street estimates for licensing revenue, Arm achieved record quarterly revenue 1.242 billion dollars in the last three months of 2025, driven by artificial intelligence demand. This beat LSEG SmartEstimates, which are weighted by analysts’ estimates, which are more consistently accurate, by 1.54%.

Arm’s chip designs power most of the world’s smartphones and are increasingly used in AI data centers and edge computing devices.

“ARM is trying to diversify into AI chips used in DC/servers, but its success remains uncertain and its business model is still heavily reliant on royalties from chips used in consumer products such as mobile phones,” Jackson said.

He added that Arm’s outlook could worsen before it improves if Chinese smartphone production declines next year due to memory shortages, as Qualcomm has suggested.

Shares of Arm, which went public in 2023, has also faced broader tech market pressures in the run-up to earnings, falling 4% year-to-date.