Arm shares rose 5% after a Thursday report that it was developing its own chip and that it had secured Meta as one of its first customers.

The Financial Times report indicates that Arm is developing a new product that will compete with many of its customers. The semiconductor company currently licenses its technology, called an instruction set, as well as more complicated core designs, to its customers so they can build their own chips.

Arm has historically been known as the “Switzerland” of chip technology firms, a reputation it received by dealing neutrally with competing chipmakers. It counts Apple, Google, Nvidia, Amazon, Microsoft, Qualcomm and Intel as customers.

Meta is spending as much as $65 billion this year on capital expenditures for artificial intelligence development. While much of its spending is on Nvidia-based systems, Meta has also purchased other chips, including AMD’s competitor, and said it is developing its own chip internally.

Arm’s chip will be a central processor for servers, according to the report, not the kind of graphics processor typically used for the heaviest AI workloads.

Nvidia tried to purchase Arm in 2020 from Softbank for $40 billion before the deal was blocked by regulators over Arm’s key role in the chip market. Arm went public in 2023 and now has a market cap above $173 billion.

Arm shares have risen nearly 29% so far in 2025 as it is seen as a core enabler of AI systems. Company leadership has told investors that it is looking to sell more advanced technology to its existing customers to grow revenue.

Rene Haas, Arm’s CEO, cited billions of dollars in planned data center spending from Google for $75 billion, Microsoft for $80 billion and Meta for $60 billion as an opportunity for Arm earlier this month. “No one is pulling back,” Haas said.

“No one is pulling back,” Hass said earlier this month on an earnings call.

Arm is also a technology partner of the Stargate initiative, which plans to spend as much as $500 billion building AI infrastructure for OpenAI.

Arm declined to comment, and Meta did not respond to CNBC’s request for comment.

WATCH: Arm CEO: Stargate is an amazing opportunity for technology and innovation

Shares of AppLovin ripped 30% higher Thursday after the company reported a fourth-quarter earnings beat, causing many analysts to lift their price targets as the stock crossed the $500 mark for the first time ever.

The ad tech company said on its earnings call it was divesting its apps business as the company aims to move into other verticals for its artificial intelligence-powered AXON advertising software, such as fintech, insurance and automotive.

Analysts at Wolfe praised the sale of the apps segment, saying the company’s financials “gets cleaner at a time when its growth outlook gets better,” while raising their price target to $550 from $490.

“We believe the sales of its game development/publishing will make it easier for investors to justify APP’s expanding valuation multiple,” wrote Oppenheimer analysts after bringing their own target up to $560 from $380.

Wall Street is bullish on AppLovin, with 77% of the analysts covering the company rating it a buy or outperform, according to a CNBC analysis. There are no sell ratings.

AppLovin reported earnings per share of $1.73 on $1.37 billion in revenue for the final quarter, outperforming the expectations of analysts’ polled by LSEG, who expected earnings of $1.24 per share on $1.26 billion in revenue.

Net income in the quarter more than tripled to $599.2 million, or $1.73 per share, from $172.3 million, or 51 cents per share, a year earlier, the company said in a statement. Revenue jumped 43% from $953.3 million a year earlier, fueled by improvements and expansions to new categories for its AXON models.

AppLovin was the most successful tech stock in the U.S. last year, soaring more than 700% and outperforming even the biggest names in the AI space. Over the past 12 months, its gains are up more than 1000%, neck-and-neck with Palantir as the best performer year to date.

It expects first-quarter revenue of between $1.36 billion and $1.39 billion, exceeding the $1.32 billion average analyst estimate, according to LSEG.

More than $1 billion of that will come from its advertising segment, as the company said it is “still in the early stages” of bolstering its AI models further.

— Additional reporting by CNBC’s Michael Bloom.

Reddit shares dropped more than 6% Thursday after the social media company fell short of Wall Street’s user estimates in the fourth quarter.

The company reported a 39% rise in global daily active uniques from a year ago to 101.7 million, below the Wall Street estimate of 103.1 million.

In a letter to shareholders, CEO Steve Huffman said that Reddit experienced some “volatility” in user growth as a result of a Google search algorithm change. He noted that the tweak occurs twice a year and primarily impacts logged-out users who visit the site without an account, but search-related traffic has since recovered into the first quarter.

“What happened wasn’t unusual — referrals from search fluctuate from time to time, and they primarily affect logged-out users,” Huffman wrote. “Our teams have navigated numerous algorithm updates and did an excellent job adapting to these latest changes effectively.”

Despite the disappointing user figure, Reddit surpassed Wall Street’s top-and-bottom line estimates for the period, with earnings of 36 cents per share on $428 billion in sales. Analysts polled by LSEG had forecast earnings of 25 cents per share and $405 billion in revenue. Sales also grew 71% from a year ago.

Reddit also offered better-than-expected revenue guidance for the first quarter, while net income roughly quadrupled to $71 million, or 36 cents per share.

Many Wall Street analysts stood by the stock despite the Google issue, with Morgan Stanley analyst Brian Nowak recommending that investors buy the dip. Wells Fargo analyst Ken Gawrelski maintained his overweight rating, but said a full bounce back in the stock may depend on steady consecutive U.S. user growth.

“We like Reddit’s growth but see balanced risk reward,” wrote Bank of America’s Justin Post. He cited a high valuation, dependence on Google and a potential revenue deceleration later this year among the reasons for his neutral rating.

Reddit’s stock has climbed since its initial public offering in March 2024 at $34 a share. Shares are up 24% year to date.

— CNBC’s Jonathan Vanian contributed reporting