This earnings season has been brutal for chip stocks, and the latest results from ARM and Qualcomm only reinforce the new reality: “beats” aren’t enough when investors want big upside and clear growth acceleration.

ARM’s shares slipped after its earnings as smartphone royalty revenue disappointed. Despite strong ambitions in AI and data center chips, ARM is still heavily dependent on the smartphone market, which remains sluggish. Investors wanted to see a sharp turnaround or at least outsized growth in new areas to offset the mobile softness—but instead got a reminder that legacy revenue streams still matter. It’s a classic case of the market punishing even slight weakness in key segments, especially when the valuation is already high.

Qualcomm, for its part, actually beat expectations and issued a stronger-than-expected guide for the current quarter. But that wasn’t enough: shares slid in after-hours trading. Why? The market is already pricing in big AI and connected device growth, so even a solid quarter doesn’t move the needle unless the guidance is truly explosive or there’s a surprise in a higher-growth segment. Investors remain nervous about smartphone demand, competitive threats from custom silicon, and the risk that AI growth is still too slow to offset cyclicality in legacy chip sales.

The takeaway for traders and investors: this earnings season, “good enough” simply isn’t good enough—especially for tech and semis. With so much future growth already priced in, only the very best stories and biggest surprises get rewarded. Everyone else? They’re stuck in the penalty box until they prove they can truly accelerate in a post-smartphone, AI-powered world.