Arm Holdings plc ( ARM ) shares fell on Thursday after the chip designer reported fiscal first-quarter 2026 earnings that missed revenue expectations and issued a weaker-than-expected outlook for the current quarter.

What To Know: For the first quarter, Arm posted revenue of $1.053 billion, just under the $1.055 billion analyst estimate. Adjusted earnings per share came in at 35 cents, matching analyst expectations.

The company reported strong royalty revenue, which increased 25% year-over-year to $585 million, driven by wider adoption of the Armv9 chip architecture and growth in data center usage. However, license and other revenue declined 1% year-over-year, partially offsetting the gains.

Operating cash flow was $332 million, and free cash flow was $150 million in the quarter. Arm ended the period with $2.91 billion in cash, cash equivalents and short-term investments.

Looking ahead, Arm guided for second-quarter revenue between $1.01 billion and $1.11 billion, versus consensus estimates of $1.056 billion. Adjusted EPS guidance for second-quarter ranged from 29 to 37 cents, versus estimates of 35 cents.

Following the results, multiple analysts adjusted price targets.

Keybanc analyst John Vinh maintained an Overweight and raised the price target from $175 to $190.

Raymond James analyst Srini Pajjuri maintained an Outperform and raised the price target from $140 to $165.

UBS analyst Timothy Arcuri maintained a Buy and lowered the price target from $185 to $175.

Morgan Stanley analyst Lee Simpson maintained an Overweight and lowered the price target from $194 to $180.

ARM Price Action: Arm shares closed Thursday down 13.4% at $141.46, according to Benzinga Pro.

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