Arm shares soar on rising demand for AI technology | Arm

Arm shares soar on rising demand for AI technology | Arm

The market value of the chip designer Arm has risen by more than a fifth in pre-market trading after the UK-based tech company beat revenue expectations, citing a recovery in the smartphone market and high demand for artificial intelligence technology.

Shares in Arm, the world’s biggest supplier of design elements for the processing chips used in products from smartphones to games consoles, gained more than 22% before the opening of Nasdaq in the US on Thursday.

The Cambridge-headquartered company, which snubbed the UK when its parent company, SoftBank, floated the business in September, has a market capitalisation of $80bn (£63bn).

Rene Haas, Arm’s chief executive, said on Wednesday the company was benefiting from the “profound opportunity” brought by the demand from tech firms to release products and apps underpinned by AI.

Arm, which is still controlled by Japan’s SoftBank, owner of 90% of its shares, beat analyst expectations to report revenues up 14% year on year to $824m in the final calendar quarter.

Increasing demand from companies wanting to license its designs to run AI, and a recovery in sales of smartphones, prompted Arm to raise its full-year revenue and profit guidance.

Its performance was cheered by investors, resulting in Arm’s shares soaring by 41% in extended trading on Wednesday.

The company closed 5.5% up at $77 a share, well above the $51 price offered when Arm debuted in September. Frenzied pre-market trading on Thursday suggested Arm shares could open at more than $93.

Arm’s first quarterly report, published in November, was not well received by investors after the company revealed a $500m payout in remuneration costs after the New York listing, which required it to settle outstanding shares previously granted to employees.

SoftBank’s decision to list in the US, despite intense lobbying by the UK government, dealt a blow to Rishi Sunak’s ambitions to make London the first choice for tech company flotations.

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Arm previously had a dual listing on both sides of the Atlantic before it was acquired by Softbank for £24.6bn in 2016 and had been a member of the FTSE for 18 years.

The chip designer, which promised to keep its headquarters, operations and “material intellectual property” in the UK, indicated it would consider a secondary London listing “in due course”.

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