Arm forecasts Q2 revenue of $1.38 billion and EPS of 47 cents, but shares slide nearly 7% on smartphone royalty outlook

Arm posted above-consensus results and guided the current quarter higher on sustained AI infrastructure demand, but shares fell after management flagged softer sequential smartphone royalty growth tied to handset supply constraints. The mix shift highlights near-term volatility in royalty-driven margins despite strong data-centre momentum and new CPU product traction. Spillover risk is most relevant to semiconductor and AI infrastructure sentiment, but the catalyst is primarily single-stock guidance.