Is ARM (ARM) stock price reversal due to good performance? Will it have a strong presence in the AI data center market [financial results preview]

$Arm Holdings(ARM.US)$IsAfter closing on 7/31 (local time)Financial results are scheduled to be announced on
●The stock price has fallen 20% from the high price, and if the financial results are good, there is a possibility that it will trigger a stock price reversal. What are the points of interest
　1)Pay attention to guidance rather than actual results to see if business performance recovery continues
　2)The main smartphone market is showing signs of recovery, and the company's loyalty revenue is positive, and if the replacement cycle is accelerated with AI smartphones, a tailwind
　3)Whether there is progress in the data center and AI PC markets, which are future growth fields
●Is the risk of stock price fluctuations immediately after financial results are announced, are earnings forecasts important in the medium to long term, and AI market trends in the short term

2) The main smartphone market is showing signs of recovery, and the company's loyalty revenue is positive, and if the replacement cycle is accelerated with AI smartphones, it is a tailwind
Global smartphone sales are showing signs of recovery. According to the US research company IDC, global smartphone shipments from April to June increased 6.5% from the same period last year, showing positive growth for the fourth consecutive quarter. For the company, which has a market share close to 100% in the smartphone market,Increase in royalty incomeIt is expected to lead to

For the full year of 2024, smartphone shipments are expected to increase 8% from the previous year, and the recovery is expected to continue moderately in the latter half of the year. There is a possibility that AI-equipped smartphones will encourage consumers to replace them. Samsung Electronics and $Apple(AAPL.US)$Smartphones equipped with AI are all being strengthened. According to Bloomberg, Apple is targeting a 10% increase in shipments of the new iPhone scheduled to be announced this fall from the current model. Apple is the largest foundry in the world with its main customer $Taiwan Semiconductor(TSM.US)$Also, in the recent financial results announcement, it was revealed that demand for 3nm, which is mainly used in chips for AI-equipped smartphones and their devices, is growing steadily. If the replacement cycle is accelerated by AI-equipped smartphones, it will be a plus for arms as well. Attention is drawn to whether there are any positive comments on this from the management team at financial results briefings.

Attention is also being paid to whether adoption of the company's new architecture “v9” is expanding. Since the royalty rate for “v9” will be about 2 times that of the conventional “v8,” it is expected that if recruitment acceleration continues, it will lead to an increase in royalty income.

3) Whether there is progress in the data center and AI PC markets, which are future growth fields
In the data center and PC markets, Arm's market share is low, and Intel's “x86” has the majority share. However, the expansion of the introduction of AI in data centers and the spread of AI personal computersA business opportunity for ArmIt has become.

In the AI PC market, $Qualcomm(QCOM.US)$The semiconductor “Snapdragon X Elit” is based on an arm-based design. Microsoft began selling AI PCs equipped with Qualcomm's “Snapdragon X Elite” in mid-June this year. In the data center market, $NVIDIA(NVDA.US)$“Grace Blackwell,” which was recently announced by, is a combination of Arm's CPU and NVIDIA's GPU. Shipments of “Grace Blackwell” are scheduled to begin later this year.

The management stated at the financial results briefing in early May that “adoption of arms in AI applications and data centers will be accelerated by Grace Blackwell.” At the TMC conference hosted by JPMorgan in late May, it was commented that there is strong momentum in the cloud computing field in the data center market. Arm's market penetration rate in the cloud computing field is currentlyfrom 10% to 15%It was shown that there is a possibility that it will rise. Whether progress has been made to support the positive outlook of the management team is also drawing attention at this financial results briefing.

Is the risk of stock price fluctuations immediately after financial results are announced, are earnings forecasts important in the medium to long term, and AI market trends in the short term
◇Stock price reaction the day after financial results were announced
When I checked the stock price reaction the day after past financial results, stock prices fell 2 out of 3 times (① and ③ in the graph). Both were due to poor guidance. Stock prices skyrocketed for the remaining 1 time (② in the graph). This is because both results and guidance greatly exceeded market expectations.