Arm’s AI-Chip Push Faces Bottlenecks as Rally Reverses

Arm beat Q4 estimates, posting adjusted EPS of $0.60 on $1.49B revenue, but after an initial ~12% after-hours surge, the stock slid about 8% as investors weighed supply bottlenecks and higher costs from Arm’s shift into in-house AI chips. Management said AGI CPU demand has already topped $2B within six weeks, yet securing wafers, memory, and advanced packaging remains tight, leaving the revenue target for the product line at $1B through FY2027. The move into manufacturing could boost long-term growth but may pressure margins if growth slows. Analysts remain largely bullish, though the elevated expectations leave room for near-term volatility.