Arm Holdings Drops 3.6% Despite AI Breakthroughs

On May 19, 2025, Arm Holdings experienced a 3.6% drop in pre-market trading.

Arm Holdings has recently made significant strides in the AI sector, particularly with its collaboration with Stability AI. The two companies jointly released a compact text-to-audio model called "Stable Audio Open Small," which can generate high-quality stereo audio segments of up to 11 seconds in approximately 7 seconds. This model is optimized to run on mobile devices like smartphones, leveraging the "Adversarial Relativistic-Contrastive" (ARC) technology developed by researchers at the University of California, Berkeley. The model's performance is even more impressive on high-end hardware like the Nvidia H100 GPU, where it can generate 44kHz stereo audio in just 75 milliseconds, achieving near-real-time audio synthesis.

Compared to the original Stable Audio Open model, which had 11 billion parameters, this slimmed-down version uses only 3.41 billion parameters, significantly reducing computational resource requirements and enabling smooth operation on consumer-grade hardware. This breakthrough is the first major outcome of the collaboration between Stability AI and Arm, announced in March 2025. The model's architecture has been thoroughly redesigned to include three core components: an autoencoder for compressing audio data, an embedding module for interpreting text prompts, and a diffusion model for generating the final audio. The model excels in generating sound effects and field recordings but has limitations in music generation, particularly with vocals, and is currently optimized for English language inputs.

Arm Holdings is also making strides in the automotive sector through its partnership with AWS. The collaboration focuses on integrating AI with software-defined vehicles (SDVs) to enhance driving experiences and human-machine interactions. The solution leverages edge computing, IoT, and quantization technologies to improve the intelligence of vehicles. Key contributions include Arm CPU-optimized AI instruction sets like SDOT and i8mm, as well as KleidiAI's advancements in model compression and inference acceleration, making AI applications more efficient and resource-friendly. This collaboration is paving the way for future advancements in intelligent vehicles.