Arm posted fourth fiscal quarter results that, while beating analysts' expectations, disappointed investors with its outlook for the period ahead. The company delivered adjusted earnings of 55 cents per share on revenue of $1.24 billion, slightly beating estimates. Despite this, however, the stock fell more than 8% on a weaker outlook for the next quarter, with revenue and profit expectations remaining below market consensus.

What's going on?

Arm $ARM continues to benefit from the growing demand for energy-efficient chips, especially as artificial intelligence develops. Its technology powers most premium smartphones today, and rising licensing revenues, particularly from the newer Armv9 architecture, confirm the company's strategic importance. Although net profit declined slightly year-on-year, the outlook for full-year revenue growth and upcoming AI initiatives suggest that Arm has the ambition to become a major player in technological breakthroughs in AI, IoT and data centres.

How was…