Arm Holdings shares fell 8% after missing licensing revenue estimates. Qualcomm’s forecast of a global memory shortage affecting phone sales added pressure. Analysts predict weaker future royalties due to the revenue miss. Arm’s chip designs are valued for power efficiency, crucial for managing energy costs in data centers.

Licensing revenue for Arm’s fiscal third quarter was $505 million, slightly below estimates. The company anticipates royalties to increase “low teens” year-on-year in the fourth quarter. Arm projects licensing revenue to grow “high teens” compared to last year. Fourth-quarter revenue forecast is optimistic at $1.47 billion.

Strong demand for Arm’s energy-efficient chip designs used in AI applications across data centers and smartphones drove an upbeat fourth-quarter revenue forecast. Major tech companies embracing Arm’s architecture for AI server chips validate its role in the ecosystem. CEO Rene Haas sees strong demand for Arm’s AI-focused designs with no end in sight.

Arm reported total revenue of $1.24 billion for the third quarter, up 26%. Adjusted profit was 43 cents per share, beating expectations. Revenue from royalties rose 27% to $737 million, exceeding estimates. Arm’s efforts to build its own complete chip have increased operating expenses.

Arm plans an event on March 24 but executives have not disclosed details. The company’s push for new chip technology designs to boost licensing revenue was not enough to meet Wall Street estimates. Nvidia and Apple are among companies using Arm’s technology, paying royalty fees for each product incorporating their designs.

Read more at Yahoo Finance: Arm Holdings shares fall as licensing sales miss estimates