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Arm Holdings (ARM) Drops 13% on Disappointing Q2

By Angelica Ballesteros | August 01, 2025, 2:40 PM

We recently published Massive Sell-Off: 10 Stocks in a Bloodbath. Arm Holdings plc (NASDAQ:ARM) is one of the worst-performing stocks on Thursday.

Arm Holdings fell for a third straight day on Thursday, shedding 13.44 percent to close at $141.38 each as investors soured on its dismal earnings performance in the first quarter of fiscal year 2026.

In its earnings release, Arm Holdings plc (NASDAQ:ARM) said net income during the period declined by 42 percent to $130 million from $223 million in the same period last year. Total revenues, however, were higher by 12 percent at $1.05 billion versus $939 million.

Heading into the second quarter, Arm Holdings plc (NASDAQ:ARM) is targeting to hit a range of $1.01 billion to $1.11 billion in revenues, which could translate to a 19.67 percent to 31.5 percent jump from the $844 million registered in the same period last year.

“Arm is powering AI workloads everywhere with unmatched performance and energy efficiency,” Arm Holdings plc (NASDAQ:ARM) CEO Rene Haas said.

Arm Holdings (ARM) Drops 13% on Disappointing Q2
 

“Our Q1 FYE26 results exceeded $1 billion in revenue for the second straight quarter as royalties grew across all target end markets, demonstrating the strength of Arm as the AI platform of choice—from the cloud to the smallest edge devices,” he noted.

While we acknowledge the potential of ARM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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