Technology

Qualcomm and Arm bet on AI – strong growth, but falling stock prices

Qualcomm and Arm surpass revenue forecasts, increasingly focus on AI – yet stock prices respond negatively.

Eulerpool News Feb 7, 2025, 7:12 AM

Qualcomm and Arm recorded strong revenue growth in the past quarter and exceeded market expectations. Nonetheless, both stocks lost value after hours as high investor expectations were already priced in.

The US chip manufacturer Qualcomm reported revenue of 11.7 billion US dollars for the quarter ending in December, an increase of 17 percent year over year, exceeding forecasts of 10.9 billion US dollars. The revenue forecast for the coming quarter also exceeded expectations, with an upper range of 11 billion US dollars.

The British chip design company Arm, supported by SoftBank, recorded a 19 percent increase in revenue to $983 million in the same period and expects revenue of around $1.2 billion for the current quarter – in line with market expectations.

Despite strong numbers, Qualcomm shares fell 4.5 percent after hours, while Arm shares dropped 6 percent.

Qualcomm CEO Cristiano Amon stated that stronger than expected demand for smartphone chips has boosted sales. Samsung's decision to use the Snapdragon 8 Elite for its new AI flagship S25 has been a particular driver.

Both companies are focusing on artificial intelligence as a future growth opportunity. In addition to smartphones, Qualcomm is increasingly investing in automotive systems and PCs to diversify. Amon also sees recent advances by China's DeepSeek AI as advantageous for AI applications directly on devices that operate without cloud connectivity.

One challenge remains Apple's gradual withdrawal, as it advances its own chip development and plans to end its collaboration with Qualcomm on 5G modems by 2026.

Arm also benefits from the trend towards "Edge AI," that is, applications running directly on the device. CEO Rene Haas pointed to the importance of the Arm architecture for Apple's new iPhone 16 chips and the US government-supported "Stargate" project by OpenAI and SoftBank.

SoftBank founder Masayoshi Son is pursuing an ambitious AI strategy and is considering involving Arm in its own chip production in the future. Additionally, SoftBank is in acquisition talks with Ampere, an Oracle-backed chip designer, whose valuation could be $6.5 billion.

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