Breakfast News: Arm's Growth Story Hits Speed Bump

Breakfast News: Arm’s Growth Story Hits Speed Bump

May 7, 2026

Source: Image created by Jester AI.

1. Arm Sinks on Chip Supply Strains

**Arm Holdings **(ARM 0.02%) fell over 6% in pre-market trading as results warned of slower growth in the smartphone market due to a memory chip shortage, even as the outlook for AI data center growth was upgraded, providing an insight for the major tech companies that rely on Arm’s services.

• CEO sees unit growth for phones “flip to negative”: The shortage of memory chips was a key factor as Rene Haas flagged the slowdown in the smartphone division, an area it still relies on significantly for revenue. Arm provides the computing architecture that powers the iPhone for Apple (AAPL +2.08%).
• New Arm CPU has over $2 billion of customer demand across the next two financial years: The move to start to sell homegrown chips has been well received, with it being able to build on its existing scale in the cloud. The company has a 50% market share of the CPU compute market among top hyperscalers, including Amazon (AMZN +0.55%) and Alphabet (GOOG +0.41%).

2. Overnight Movers From Team Rule Breakers Recs

• Cognex (CGNX 0.41%) popped over 14% higher ahead of the market open after an impressive 24.3% year over year (YoY) revenue growth as part of quarterly results, with guidance upgraded due to broad-based strength in machine vision technology.
• Dutch Bros (BROS 1.55%) fell 3% before the opening bell as management noted ongoing cost pressure on margins, although updated forecasts indicate at least 185 new store locations will be opened this year.
• BBB Foods (TBBB 1.43%) rose 2% in pre-market trading as earnings detailed a 33% YoY revenue jump. Fool contributing analyst Dan Caplinger said last month he’s impressed “with what the company and its forward-thinking founder/CEO have accomplished, and we see more room for BBB Foods to expand in the fast-growing Mexican grocery market.”
• Axon Enterprise (AXON 5.50%) moved around 1% lower ahead of the opening bell due to results revealing pressure on margins and cash flow as investments climbed.

3. Team Hidden Gems’ Recommendations Popping in Pre-Market Trading

• Paycom Software (PAYC 1.13%) rose over 4% after results were released, thanks to recurring subscription income making up more than 95% of total revenue. However, management is guiding for more measured growth in the quarters ahead.
• Sezzle (SEZL 3.49%) soared about 15% as quarterly earnings revealed a sharp 48.4% YoY jump in active subscribers that helped to fuel a 37.3% increase in gross merchandise volume.

4. Memory Stocks Fly as Scarcity Continues

Micron Technology (MU +15.40%) closed over 4% higher yesterday, with Western Digital (WDC +3.47%) not far behind, as memory sector stocks continue to rally amid chip shortages and continued AI demand.

• Mag 7 earnings detail higher capex spending: The jump over recent days can be partly attributed to big tech companies’ actions, with Microsoft (MSFT 1.33%) raising its capex forecast for the year by $25 billion, with Meta (META 1.18%) adding $10 billion. Both spoke of higher component costs as the justification.
• Micron due to generate 80 cents of gross profit for each dollar of revenue in 2026: Companies in the sector are able to have strong pricing power due to the current market backdrop, although some are cautious about the future prospects given historical volatility in related stocks.

5. Next Up: Selected Earnings to Watch

• Celsius Holdings (CELH 5.75%) shares charged around 5% higher in pre-market trading following a blockbuster first quarter that saw revenue skyrocket 137.7% to a record $782.6 million. While the core Celsius brand saw a steady 6% uptick, the real story was the explosive growth of Alani Nu, which delivered $368.1 million in quarterly sales.
• Arista Networks (ANET +0.07%) should deliver earnings after the market closes, with a focus on how it’s dealing with supply constraints. The stock is outperforming the S&P 500 by 467% since the May 2022 Rule Breakers rec.
• Airbnb (ABNB +0.68%) releases results after the closing bell. The stock, recommended by both Team Rule Breakers and Team Hidden Gems, is aiming to deliver strong growth in gross booking value (GBV), following on from last quarter.

6. Your Take

**DoorDash **(DASH 4.26%) reported Wednesday, sending the stock up over 10% in after-hours trading. **Uber **(UBER 1.67%) rose over 8.5% yesterday on positive earnings, too.

We’re asking which of the two food delivery rivals you’d rather start a position in today, and why?

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