Arm shares jump over 50% as AI demand boosts Q3 results

US-listed shares in Arm Holdings surged by more than a half on Thursday in New York after the British semiconductor company reported record revenues for its third quarter, helped by strong demand for AI applications.

ADR shares of the Cambridge-based firm were up 57% at $120.92 by 1128 ET, having touched a record high of $126.59 earlier in the session.

Arm, which is mostly owned by SoftBank and floated on the New York Stock Exchange last year, said third-quarter revenues were up 14% year-on-year at $824m with record royalty revenues and stronger-than-forecast growth in licensing.

Royalty revenues rose 11% to $470m, which the company said was a result of a "recovery" in the semiconductor industry, driven by the smartphone market which returned to growth, as well as "rapidly increasing" penetration of Armv9-based chips.

Meanwhile, licence revenues jumped 18% to $354m, which the company said was better than expected due to strong demand for more advanced Arm CPUs as companies increase investment in AI across all end markets.

"From the most complex AI cloud applications to the smallest edge devices, AI on Arm is everywhere," the company said in a statement. "Arm’s performant and power-efficient CPU platform is used by more and more software developers, making it easier for OEMs to adopt Arm technology, which generates further demand for Arm-based chips."

Operating profits were 17% higher than last year at $338m.

"Arm delivered another quarter of record revenues driven by continued adoption of the world’s most pervasive compute platform," said chief executive Rene Haas.

“More customers moving to higher-value Armv9 technology combined with market share gains in cloud server and automotive resulted in strong royalty growth. The AI wave drove licensing growth as these new devices require Arm’s performant and power-efficient compute platform."