How does ARM's earnings performance compare to industry peers?

ARM Holdings demonstrates a unique earnings profile within the semiconductor industry, distinct from its peers like Nvidia, TSMC, Broadcom, ASML Holding, and Qualcomm. Here's a detailed comparison: 1. **Earnings Per Share (EPS)**: - ARM's EPS is $0.24, which is significantly lower than its peers. For instance, Nvidia's EPS is $0.89, TSMC's is $0.44, and Broadcom's is $1.14. This indicates that, relative to its market capitalization, ARM's earnings are relatively modest. 2. **Revenue**: ARM's total revenue for the most recent quarter is $983 million. When compared to its peers, this figure is substantially smaller. For example, Nvidia's revenue is $39.33 billion, TSMC's is $26.49 billion, and Broadcom's is $14.92 billion. This suggests that, while ARM is a key player in the industry, its revenue scale is much smaller than that of these other semiconductor giants. 3. **Market Capitalization**: ARM's market capitalization is not as high as its peers. For example, Nvidia's market cap is $2675.95 billion, TSMC's is $857.08 billion, and Broadcom's is $795.19 billion. This implies that, despite its strong position in the industry, ARM's market value is still relatively modest compared to some of its competitors. 4. **Profitability Metrics**: ARM's business model, which focuses on licensing its technology rather than selling chips directly, leads to a different set of profitability metrics compared to its peers. While ARM collects royalties on its licensed technology, which is a significant source of revenue, the lag between signing a contract and starting royalty payments means that its current revenue figures may not fully reflect the AI boom and other demand drivers. In conclusion, ARM's earnings performance is best understood in the context of its unique business model and the nature of the semiconductor industry. While its EPS and revenue are lower than those of its peers, ARM's technology is ubiquitous in smartphones and other devices, providing a stable and predictable revenue stream through its licensing and royalty model.