Earnings season can be brutal, especially when the market is running on high expectations and quick to punish any sign of weakness. ARM and Qualcomm both illustrate how a “beat” is no longer enough if the forward narrative doesn’t excite or if key segments show cracks.

ARM’s shares slipped after earnings, with the culprit being disappointing smartphone royalties—a reminder that even as the company pushes into AI and data centre chips, its bread-and-butter smartphone licensing business remains under pressure. The street wanted clear signs of accelerating growth in high-margin segments, but lingering weakness in global handset demand cast a shadow. For ARM, the takeaway is simple: investors want more than incremental improvement; they want evidence that new growth engines are firing on all cylinders. Until then, any miss in core segments gets punished.

Qualcomm, meanwhile, did what many companies dream of: it beat fiscal Q3 expectations and issued strong guidance. Yet, even this wasn’t enough to prevent the stock from sliding in after-hours trading. Why? Partly because a lot of optimism was already baked in, but also because investors worry about the pace of recovery in smartphones and the competitive threat from custom silicon and new chip entrants. In a market so obsessed with AI and next-gen data center chips, solid-but-not-explosive growth in legacy businesses just doesn’t move the needle.

Bottom line: This earnings season is unforgiving. “Good” isn’t good enough—especially for chipmakers at the crossroads of tech innovation and cyclical handset trends. Until investors see accelerating top-line growth or a blowout new AI contract, stocks like ARM and Qualcomm may struggle to find their footing—even if the numbers look solid on paper. For traders, this is a reminder to watch the guidance and segment breakdowns closely, and for long-term investors, it’s a time to look for bargains only when the dust truly settles.