Arm Q4 - Business is growing

Specialist chip maker Arm posted good quarterly numbers, with revenue up 19% year-on-year to $983 million. The outlook for 2025 was tweaked downwards, causing a 6% drop in the share price on the day.

The long-term AI story is intact, but Arm doesn't benefit in the same way as Nvidia. Instead, it makes money through licensing fees and royalties, which it's trying to increase, most notably with its new Armv9 design used in Apple's latest iPhones. A recent legal setback against Qualcomm suggests pricing power won't come easy however.

On the bright side, Arm is a named tech partner in Trump's $500 billion AI infrastructure plan, a sign of its growing relevance beyond mobile phone chips.

Arm's share price has more than tripled since IPO, and while it has a strong position in chip design, the valuation already prices in a lot of future growth. At current levels, it's a risky buy.