Arm shares soar as much as 41% after chip designer gives strong forecast, says AI is boosting sales

Arm reported fiscal third-quarter earnings Wednesday that beat estimates and gave a strong profit forecast for the current quarter. The shares soared as much as 41% in extended trading.

Here’s how the company did for the quarter ending December versus consensus estimates from LSEG, formerly known as Refinitiv:

• Earnings per share: 29 cents adjusted vs. 25 cents expected
• Revenue: $824 million vs. $761 million expected

Arm, whose chip design technology is in nearly every smartphone and many PCs, said it expects earnings per share for the fiscal fourth quarter of between 28 cents and 32 cents on sales of $850 million to $900 million. Analysts expect earnings of 21 cents per share on sales of $780 million.

The company reported net income of $87 million, or 8 cents per share. Total revenue in the quarter increased 14% from a year earlier.

Arm makes money through royalties, when companies pay for access to build Arm-compatible chips, usually amounting to a small percentage of the final chip price.

Arm said its customers shipped 7.7 billion Arm chips during the September quarter, the most recent period for which figures are available.

The stock rose as high as $108.89 in after-hours trading, but later slipped below $100. It close on Wednesday at $77.01.

Royalty revenue increased 11% on an annual basis to $470 million. The company said the jump was partially because of a recovery in the smartpho