Arm Holdings PLC (ARM) shares jumped in early trading Thursday after the chip design company delivered quarterly results that exceeded expectations, demonstrating continued strength in AI and data center markets.

Here's what Wall Street analysts are saying about the results:

JPMorgan analyst Harlan Sur kept his Overweight rating while reducing his price target from $180 to $145. Arm reported revenues of $1.242 billion for the fiscal third quarter, up 9% sequentially and 26% year-over-year, topping the consensus estimate of $1.23 billion. The revenue beat came from better-than-expected royalty revenues in smartphones and cloud data centers, Sur noted.

Management's guidance called for revenues of $1.470 billion at the midpoint for the current quarter, representing 18% growth both sequentially and year-over-year. The guidance slightly exceeded consensus expectations, driven by strong licensing revenues and continued datacenter momentum, with data center royalty revenue doubling year-over-year.

Rosenblatt Securities analyst Kevin Cassidy maintained his Buy rating while trimming his price target from $180 to $175. Arm delivered non-GAAP earnings of 43 cents per share, beating the 41-cent consensus. The outperformance resulted from higher royalty revenues and slightly lower operating expenses.

Royalty revenue grew 27% year-over-year to $737 million in the quarter. Cassidy highlighted management's emphasis on CSS (Compute Subsystems) as a key structural tailwind, noting continued traction as it helps customers shorten time-to-market and reduce integration complexity, which increases value per chip and supports royalty expansion.

KeyBanc Capital Markets analyst John Vinh held his Overweight rating while lowering his price target from $200 to $170. He pointed to higher-than-expected royalty upside driven by stronger smartphone royalties and robust data center demand. Management highlighted several positive trends:

• Smartphone royalty rates per chip grew faster than the overall market
• Data center royalties surged more than 100% year-over-year
• The company gained market share in the datacenter segment
• Auto market revenues grew by double-digits

Benchmark analyst Cody Acree reaffirmed his Hold rating. He noted that Arm shares initially fell around 8% in after-hours trading Wednesday as investors grappled with the company's relatively modest upside results and guidance compared to its premium valuation.

The company's projection of annual royalty growth slowing to the low-teens in the fiscal fourth quarter, down from the mid-20% growth rate sustained over recent quarters, added pressure to the stock. Recent cautious commentary from Qualcomm Inc. (QCOM), several peer component vendors, and smartphone OEMs also raised investor concerns about the negative impact on handset units from component supply constraints and rapidly rising memory prices.

Price Action: Shares of Arm Holdings had risen 7.76% to $113.04 at publication Thursday.