Arm Holdings (ARM, Financial) was in the spotlight Monday as Wells Fargo flagged a cautious outlook ahead of the company's fiscal fourth-quarter earnings report. The chip design firm is set to report results on May 7.
Wells Fargo analyst Joe Quatrochi said uncertainty around tariffs remains a key risk, particularly given that 62% of Arm's royalties in fiscal 2024 came from consumer electronics like smartphones and PCs. He noted that while exemptions are in place, potential demand destruction could impact results. Quatrochi, who has an Overweight rating on Arm, lowered his price target to $150 from $185, citing concerns that initial fiscal 2026 guidance may fall short of Wall Street expectations.
Quatrochi added that updates around Arm's data center exposure will be important, especially progress tied to Amazon's Graviton chips, as well as developments involving Nvidia's (NVDA, Financial) Grace CPUs, Microsoft's (MSFT, Financial) Cobalt project, and Google's (GOOG, Financial) Axion efforts.
Additionally, investors will watch for new details on Arm's v9 and CSS technology adoption rates, which Quatrochi expects remained roughly flat at about 25% penetration compared to the December quarter.
Consensus calls for earnings of $0.53 per share on $1.23 billion in revenue.
