ARM Holdings earnings analysis: questions answered and next catalysts

Arm Holdings ADR (ARM) beat on every headline number, and the stock fell anyway. The fiscal Q2 2027 report came out after the Nov 4 close. EPS was $0.52 vs $0.47 expected (+10.6%), and revenue was $1.44B vs $1.38B.

Arm Holdings ADR (ARM): Trading at $168.37, -12.22% on the day, as of Nov 5, 1:24 PM EST (Market Cap: $180.42B) || 1W: -26.43% || 1M: -44.43% || 52W range: $100.02–$452.70

The pre-open indication was only about -3.4%. The selling deepened once the market digested the royalty detail. The stock has now lost nearly half its value in a month, so expectations were elevated going in. Peers’ disappointing handset numbers added to the pressure.

Questions Answered

• Is licensing strong? Yes. Licensing revenue was $773M, up 50% YoY, helped by new ATA and CSS agreements. HSBC put it 16% above consensus.
• Is the AGI CPU supply-constrained? Less so. Management secured more supply and expressed confidence in meeting up to $2B of customer demand. It also sees upside to its $1B+ revenue target, though it did not formally raise it.
• Are data center royalties real? Yes. They doubled, according to RBC’s read of the call.

Questions Left Open

• Royalties lagged. They rose just 8% YoY to $670M, against Barclays’ 14% estimate. Royalties track actual chip shipments, so they are the cleaner demand signal. Android weakness is the culprit.
• Guidance was thin. Q3 revenue guidance of about $1.54B barely topped the $1.53B consensus.
• Margins may be under pressure. Barclays flagged the AGI CPU hardware business and rising operating expenses. It cut its target to $325 from $360.
• The Qualcomm licensing dispute is still unresolved.

Arm has now beaten four quarters running. Its price reactions have shifted from positive to negative.

Analyst Split

• Bulls: Barclays $325, RBC $300 (Outperform), Piper Sandler $270, Needham $255, Wells Fargo $255. Most cut targets on sector multiple compression rather than on the business.
• Skeptics: HSBC cut to $215 (Hold). Goldman Sachs reiterated Sell at $160, expecting the stock to stay range-bound.
• RBC noted a trailing P/E near 195 and said InvestingPro analysis suggests the stock looks overvalued.

Next Catalysts

1. Next earnings: Feb 3, 2027, with an official date, during the open market session. The listed consensus is EPS $0.46 and revenue $1.14B. That revenue figure sits well below the company’s $1.54B guidance, so it is probably stale. Expect it to be revised.
2. Royalty re-acceleration: Watch for a smartphone bottom, which RBC thinks is near. Data center royalty growth is the other thing to track.
3. AGI CPU updates: RBC expects management to update its forecasts in coming quarters. A formal raise above $1B would be the clearest upside trigger.
4. Margins and opex: hardware mix against the high-margin licensing business.
5. Qualcomm dispute and sector valuation swings.

Consensus revisions were flat after the print: EPS 30d +0.06%, and revenue 30d -0.02%. Analysts are not yet rewriting the numbers.

Levels to Watch

Today’s low was $163.13. Arm Holdings ADR (ARM) falling below $163.13, today’s low would extend the slide. Arm Holdings ADR (ARM) rising above $183.56, the after-hours print would signal a recovery. All prices are as of Nov 5, 2026, intraday, and may lag.