Feb 4 (Reuters) - Arm Holdings O9Ty.F, ARM.O forecast fourth-quarter revenue above Wall Street estimates on Wednesday, driven by demand for its energy-efficient chip designs used in artificial intelligence applications from data centers to smartphones.
Arm's chip designs are prized for their power efficiency, a critical advantage for data center operators looking to manage their soaring energy costs and heat generated by running massive AI models.
The company projected revenue of $1.47 billion for the fourth quarter, compared with analysts' average estimate of $1.44 billion, according to data compiled by LSEG.
Major technology companies, including Nvidia NVDA.O with its Grace central processing unit, have embraced Arm's architecture for AI-focused server chips, validating its role in the AI ecosystem.
AI agents, which are pieces of software that can complete some tasks online and on PCs, will continue to benefit Arm's sales for the foreseeable future.
"It's beyond no end in sight," Arm CEO Rene Haas told Reuters in an interview.
Chips based on Arm's designs, AI companies have found, are needed to manage the vast amounts of data flowing between Nvidia graphics processing units and other AI processors.
The company reported total revenue of $1.24 billion for the third quarter, compared with an estimate of $1.22 billion.
Revenue from royalties, which Arm collects on each chip shipped using its technology, rose 27% to $737 million in the third quarter, above estimates of $707.9 million, according to FactSet data.
Licensing revenue, which includes upfront fees for access to its technology, stood at $505 million, slightly below estimates of $519.9 million, according to FactSet.
(Reporting by Juby Babu in Mexico City, editing by Deepa Babington)
((Juby.Babu@thomsonreuters.com;))
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