Home Estate Planning Arm shares double in three days as investors cheer company’s AI-driven earnings boom

Arm shares double in three days as investors cheer company’s AI-driven earnings boom

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Shares in Arm soared over 40 per cent on Monday in New York as the three-day rally that has followed the company’s third-quarter earnings release continued.

Last week the Cambridge-based chip designer hammered analyst estimates for its third-quarter earnings thanks to the explosive demand for artificial intelligence (AI) tools.

Arm reported sales north of $800m in the third quarter, far above analysts’ consensus at $761m.

The company said it expected to report revenue of $850m to $900m for its next quarter, again exceeding the average analyst estimate of $778m.

Since it reported earnings and issued the better-than-expected guidance, shares in the firm have almost doubled in value.

“What you’re seeing here is a feeding frenzy for anything to do with Al,” said Dennis Dick, trader at Triple D Trading. “Algos are getting involved, retail traders are getting involved, people are buying options. All that is just snowballing.”

Japanese conglomerate Softbank is also riding the wave of success. Softbank, which took Arm private in 2016 for £24.3bn, retained a 90.6% stake in Arm after it re-listed the company in New York. Investors pushed shares in Softbank up 11 per cent in overnight trading in Asia on Tuesday.

Arm listed in New York last year, much to the dismay of London’s capital markets. At its current value, Arm would be the third largest company in the FTSE 100.

The AI boom has also catapulted the value of rival chip designers and makers such as Nvidia and TSMC.

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