ARM Holdings (ARM.US) saw its shares drop nearly 8% on Thursday, trading at $219.85. The decline followed the company's release of its fourth-quarter fiscal 2026 results after Wednesday's market close. ARM reported quarterly revenue of $1.49 billion, a 20% year-over-year increase, surpassing market expectations of $1.47 billion. Net income reached $641 million, while adjusted earnings per share came in at 60 cents, also exceeding forecasts.

For the upcoming first quarter, ARM projected revenue of approximately $1.26 billion, slightly above the average analyst estimate of $1.25 billion. Adjusted earnings per share are expected to be 40 cents, compared to the consensus estimate of 36 cents. However, during the analyst call, company executives indicated that they have not yet secured sufficient supply chain capacity to meet demand for a new chip. Analysts also pressed management for details on the costs associated with ARM's in-house chip development business.

The market's reaction reflects investor concerns over a sluggish smartphone market, lower-than-expected royalty revenue, and risks related to the supply chain for its self-developed chips.