Cody Acree on ARM Earnings, Chip Curbs, and China's AI Demand

ARM Holdings Earnings and Outlook

• 💡 ARM Holdings reported solid results for the March quarter but issued a weak outlook for June, missing revenue expectations by $45 million and EPS by 8 cents.
• 📉 This decline is attributed to a softness in the smartphone market and potential pull-in of royalty revenue into Q1, cannibalizing Q2 outlook.
• 📊 This contrasts with Skyworks, which guided above consensus, likely due to strength in Apple products, highlighting a dichotomy in the smartphone chip market.

Chip Curbs and China's Market Impact

• 🇨🇳 China is a significant market for chips, projected to be a $50 billion AI market in a few years, making it crucial for American companies.
• ⚠️ The US is navigating global chip curbs, creating volatility in trade and tariffs, particularly impacting the AI processor and GPU markets.
• 🚫 Restrictions are estimated to have cost Nvidia $10 billion in revenue and AMD $1.5 billion, cutting them off from the China market when the AI trade was recovering.

Geopolitical Trade-offs and Future Demand

• 🌍 While some export restrictions might ease for allies like the UAE and Saudi Arabia, this is expected to offer only a modest offset to the China impact.
• 🚀 China's demand for AI processors from Nvidia and AMD is extremely strong, driven by their development of advanced large language models and inference platforms.
• ⚖️ The US administration's