Arm’s biggest customers are also backing a rival chip design — here’s what you need to know
Dado Ruvic | Reuters
With Arm slated to start trading on the Nasdaq on Thursday, investors are considering the potential upsides — and downsides — of investing in the company.
The British chip designer itself flagged several risks in its IPO prospectus, ranging from its China business to geopolitics, but one potential threat has gained traction as its listing nears.
It’s called RISC-V, pronounced “risk five” — a rival chip design that is backed by some of Arm’s own customers.
While analysts told CNBC it’s not an immediate threat, Arm itself warned that if it gains traction, it could pose a competitive risk.
What is RISC-V?
To understand RISC-V, let’s consider what Arm actually does. Arm designs what’s known as an instruction set architecture (ISA) for chips known as processors or central processing units (CPUs). These chips can be thought of as the brain of an electronic device.
Arm’s ISA is effectively the blueprint for processors that other companies, from Apple to Qualcomm, base their chips on.
Arm charges these companies licensing fees to use its technology to build their own chips. It also gets royalties when these chips are produced and go into end devices. Arm’s designs underpin processors in 99% of the world’s smartphones.
RISC-V, meanwhile, is an entirely different instruction set architecture. RISC stands for reduced instruction set computer.
The main difference is that RISC-V is open-source, meaning it’s free to use.
“If RISC-V-related technology continues to be developed and market support for RISC-V increases, our customers may choose to utilize this free, open-source architecture instead of our products,” Arm said in its IPO prospectus.
Is RISC-V gaining traction?
RISC-V in recent years has gained support from some of the world’s biggest technology companies, many of which are also Arm customers.
Google, Samsung, Qualcomm and Nvidia, for instance, are part of a consortium formed in 2020 to develop RISC-V-based technologies.
Arm warned that if this development is successful, there could be a viable alternative to its architecture.
“Although the development of alternative architectures and technology is a time-intensive process, if our competitors establish cooperative relationships or consolidate with each other or third parties, such as the recently announced joint venture focused on RISC-V, they may have additional resources that would allow them to more quickly develop architectures and other technology that directly compete with our products,” Arm said in its IPO prospectus.
Support for RISC-V was “galvanized” after Nvidia proposed to buy Arm for $40 billion in 2020, according to technology researcher Richard Windsor, founder of Radio Free Mobile.
He suggested that other players were worried that if a major customer like Nvidia controlled Arm, it could be a disadvantage to some of Nvidia’s rivals.
The proposed takeover “raised a lot of hackles in the industry” and some Arm customers are “starting to think twice” about their dependency on the company, Windsor told CNBC this week.
“Maybe we should have a second source just in case things start not going in our direction, or we have problems with Arm,” he added, in reference to the thinking among some Arm customers.
Is RISC-V a threat to Arm?
The general consensus is that, right now, RISC-V doesn’t pose a major threat to Arm. That’s because the technology is currently far inferior to Arm’s offering.
“The issue with RISC-V is it’s much more immature. It doesn’t have the same level of support for more advanced designs,” Peter Richardson, research director at Counterpoint Research, told CNBC.
“RISC-V is quite far away from being at that leading edge, but for some workloads not at the cutting edge, then RISC-V can work quite well.”
One of Arm’s big successes is its huge customer base of major tech players. This has allowed Cambridge, England-based company to build an “ecosystem” of companies that rely on its technology — an advantage that RISC-V doesn’t have.
“Whenever you devise software that runs on one Arm, it will run on all the others as well,” Herman Hauser, founder of Acorn Computers, the company behind the first Arm chip, told CNBC’s “Squawk Box Europe” on Thursday. “So I think Arm will continue to retain its dominant position.”
However, there are fears that Chinese companies in particular could view RISC-V as a cheaper — and more appealing — alternative, particularly if Arm increases its prices.
“If Arm raises its prices, what are chip designers in China going to do? They’re probably going to go for the free version. I wouldn’t be surprised if China really scales up on RISC-V,” Cyrus Mewawalla, head of thematic intelligence at Global Data, told CNBC this week.
The Hers app arranged on a smartphone in New York, US, on Wednesday, Feb. 12, 2025.
Gabby Jones | Bloomberg | Getty Images
Shares of Hims & Hers Health fell 9% in extended trading on Monday after the telehealth company reported second-quarter results that missed Wall Street’s expectations for revenue.
Here’s how the company did based on average analysts’ estimates compiled by LSEG:
- Earnings per share: 17 cents adjusted vs. 15 cents
- Revenue: $544.8 million vs. $552 million
Revenue at Hims & Hers increased 73% in the second quarter from $315.6 million during the same period last year, according to a release. Hims & Hers reported a net income of $42.5 million, or 17 cents per share, compared to $13.3 million, or 6 cents per share, during the same period a year earlier.
For its third quarter, Hims & Hers said it expected to report revenue between $570 million to $590 million, while analysts were expecting $583 million. The company said its adjusted EBITDA for the quarter will be between the range of $60 million to $70 million. Analysts polled by StreetAccount were expecting $77.1 million.
Hims & Hers has faced controversy in recent months over its continued sale of compounded GLP-1s, which are cheaper, unapproved versions of the blockbuster diabetes and weight loss drugs. Compounded drugs can be mass produced when brand-name treatments are in shortage, but the U.S. Food and Drug Administration announced in February that ongoing supply issues had been resolved.
Some telehealth companies, including Hims & Hers, have continued to offer the compounded medications. It’s legal for patients to access personalized doses of the knockoffs in unique cases, like if they are allergic to an ingredient in a branded product, for instance. Hims & Hers has said consumers may still be able to access personalized doses through its site if clinically applicable.
In June, Hims & Hers shares tumbled more than 30% after a short-lived collaboration with Novo Nordisk fell apart. The drugmaker said Hims & Hers “failed to adhere to the law which prohibits mass sales of compounded drugs” under the “false guise” of personalization.
Hims & Hers reported adjusted EBITDA of $82 million for its second quarter, up from $39.3 million last year and above the $73 million expected by StreetAccount.
Hims & Hers will host its quarterly call with investors at 5 p.m. ET.
YTD chart of Hims & Hers Health.
–CNBC’s Annika Kim Constantino contributed to this report
Palantir topped Wall Street’s estimates Monday, surpassing $1 billion in quarterly revenue for the first time, and hiking its full-year guidance.
Shares rallied more than 5%.
Here’s how the company did versus LSEG estimates:
- Earnings per share: 16 cents adj. vs. 14 cents expected
- Revenue: $1.00 billion vs. $940 million expected
The artificial intelligence software provider’s revenues grew 48% during the period. Analysts hadn’t expected the $1 billion revenue benchmark from the Denver-based company until the fourth quarter of this year.
“The growth rate of our business has accelerated radically, after years of investment on our part and derision by some,” wrote CEO Alex Karp in a letter to shareholders. “The skeptics are admittedly fewer now, having been defanged and bent into a kind of submission.”
The software analytics company also boosted its full-year outlook guidance. For the full year, Palantir now expects revenues to range between $4.142 billion and $4.150 billion, up from prior guidance of $3.89 billion to $3.90 billion.
For the third quarter, Palantir forecast revenues between $1.083 billion and $1.087 billion, beating an analyst estimate of $983 million. Palantir also lifted its operating income and full-year free cash flow guidance.
Palantir’s U.S. revenues jumped 68% from a year ago to $733 million, while U.S. commercial revenues nearly doubled from a year ago to $306 million.
The software analytics company has seen a boost from President Donald Trump‘s government efficiency campaign, which included layoffs and contract cuts. Palantir’s U.S. government revenues jumped 53% from the year-ago period to $426 million.
“It has been a steep and upward climb — an ascent that is a reflection of the remarkable confluence of the arrival of language models, the chips necessary to power them, and our software infrastructure,” Karp wrote in a letter to shareholders.
During the quarter, Palantir said it closed 66 deals of at least $5 million and 42 deals totaling at least $10 million. Total value of its contracts grew 140% from last year to $2.27 billion.
Net income rose 144% to about $326.7 million, or 13 cents a share, from about $134.1 million, or 6 cents per share a year ago.
Palantir shares have more than doubled this year as investors bet on the company’s AI tools and contract agreements with governments.
Its market value has accelerated past $379 billion and into the list of top 20 most valuable U.S companies, surpassing Salesforce, IBM and Cisco to join the top 10 U.S. tech companies by market cap. Shares hit a new high Monday.
At its size, buying the stock requires investors to pay hefty multiples.
Shares currently trade 276 times forward earnings, according to FactSet. Tesla is the only other top 20 with a triple-digit ratio at 177.
Palantir one-day stock chart.
Firefly Aerospace CEO Jason Kim sits for an interview at the Firefly Aerospace mission operations center in Leander, Texas, on July 9, 2025.
Sergio Flores | Reuters
Firefly Aerospace has lifted the share price range for its upcoming initial public offering in a move that would value the space technology company at more than $6 billion.
The lunar lander and rocket maker said in a filing Monday that it expects to price shares in its upcoming IPO between $41 and $43 apiece.
Firefly’s new target range would raise nearly $697 million at the top end of the range. That’s up from the previously expected $35 to $39 price per share that Firefly announced in a filing last week, which targeted a $5.5 billion valuation.
Firefly announced plans to go public last month as interest in space technology gains steam, and billionaire-led companies such as Elon Musk‘s SpaceX rake in more funding.
The industry has also begun testing the public markets after a long hiatus in IPO deal activity, with space tech firm Voyager debuting in June.
Firefly makes rockets, space tugs and lunar landers, and is widely known for its satellite launching rockets known as Alpha.
The company has partnered with major defense players such as Lockheed Martin, L3Harris and NASA, and received a $50 million investment from defense contractor Northrop Grumman.
Firefly’s revenues jumped from $8.3 million a year ago to $55.9 million at the end of March, the company said. Its net loss grew to $60.1 million, from $52.8 million a year ago.
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