The drama of earnings season continued on Thursday as investors digested the latest financial reports and what they mean in terms of the ongoing economic recovery.
Investors have been sitting on the edge of their seats waiting to learn if the accelerating adoption of artificial intelligence (AI), which began in earnest last year, will help drive technology stocks to new heights. Solid results and a blockbuster forecast from a company deeply integrated in the AI space helped lift other stocks in the sector.
With that as a backdrop, AI server specialist Super Micro Computer (NASDAQ: SMCI) rose 1.6%, AI solutions provider C3.ai (NYSE: AI) climbed 3.4%, chipmaker Taiwan Semiconductor Manufacturing (NYSE: TSM) jumped 6.8%, warehouse-automation specialist Symbotic (NASDAQ: SYM) soared 9.2%, and AI audio-solutions provider SoundHound AI (NASDAQ: SOUN) surged 14.6% by the time the market closed on Thursday.
A check of all the usual suspects — regulatory filings, financial reports, and changes to analysts’ price targets — turned up nothing in the way of company-specific news driving any of these AI stocks higher. This suggests that most investors were captivated by how AI affected the quarterly financial results of Arm Holdings (NASDAQ: ARM).
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A surprisingly strong performance
The semiconductor specialist reported the results of its fiscal 2024 third quarter (ended Dec 31.), and investors were watching closely to see if the company would benefit from the mad rush to adopt AI — and they were not disappointed. And while Arm’s results were better than expected, it was the company’s blockbuster forecast that caught market watchers by surprise.
Arm generated revenue of $824 million, an increase of 14% year over year. While that might not seem spectacular at first glance, it blew past the company’s previous guidance in a range of $720 million and $800 million. Its profits also got a lift, with adjusted earnings per share (EPS) of $0.29 rising 32% year over year.
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For perspective, analysts’ consensus estimates were calling for revenue of…
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