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Lyft Shares Drop as Price Cuts Persist Amid Ongoing Competition with Uber

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Lyft (LYFT.O) shares fell 9% on Wednesday after the company announced that pricing trends from late 2024 are likely to continue in 2025, driven by its efforts to stay competitive with rival Uber. Lyft has been cutting fares and offering more discounts to attract riders and drivers.

During its fourth-quarter report on Tuesday, Lyft revealed that fares fell late last year and have remained low in early 2025. In contrast, Uber stated last week that it expects slight price increases for its UberX service this year as it passes rising insurance costs on to consumers.

Lyft has been using coupons and fare reductions to retain market share. However, Bernstein analysts highlighted that U.S. rideshare companies are reallocating incentives, reducing driver incentives to fund customer promotions—a strategy that could work if properly balanced.

Lyft emphasized that it has flexibility in adjusting incentives to ensure marketplace balance, with a strong driver base currently on its platform. However, analysts at Needham cautioned that extended price cuts could test the industry’s price elasticity and overall demand.

Following Lyft’s fourth-quarter results, at least 13 brokerages lowered their price targets for the company, with a median target of $18, according to LSEG data. The company also projected gross bookings below Wall Street estimates, mirroring Uber’s recent guidance.

Lyft’s forward 12-month price-to-earnings ratio stands at 13.4, compared to Uber’s 29.4. While Lyft’s shares fell 13.9% in 2024, they have risen 11.6% so far this year. However, if the current share decline holds, Lyft’s market capitalization is expected to drop by over $500 million to around $5.4 billion. Uber’s shares were also down about 3% on Wednesday.

Arm Lowers Full-Year Forecast, Shares Fall 6%

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Arm Holdings has revised its full-year revenue guidance downward, announcing that it will no longer meet the top end of its previous forecast. The chip technology provider, which has benefitted from the AI boom, reported a slight miss on its broader revenue expectations, sending its shares down by about 6% in extended trading.

Arm narrowed its revenue guidance for the full year to a range of $3.94 billion to $4.04 billion, down from the previous range of $3.8 billion to $4.1 billion. The company also adjusted its earnings per share forecast. Despite this, the company surpassed Wall Street’s expectations for the current quarter, with a forecast of $1.23 billion in revenue for the fiscal fourth quarter, compared to an analyst estimate of $1.22 billion.

CEO Rene Haas explained that the downward revision was due to the company being near the end of its fiscal year, providing more visibility on its final figures. Investors had been hoping for a more optimistic outlook, particularly with Arm’s technology being adopted for AI server chips and the increasing use of its higher royalty rate Armv9 design for smartphones.

Arm’s third-quarter revenue rose by 19% to $983 million, exceeding analysts’ expectations. The company continues to benefit from its widespread use in smartphones, including Apple’s latest iPhone, where its Armv9 chips are used. However, Arm faces challenges as it attempts to compete with its largest customers by raising prices and increasing royalties. Recently, the company encountered a setback in its attempt to secure higher royalties from Qualcomm, with the dispute culminating in a court case.

Arm’s participation in the U.S. government’s $500-billion AI infrastructure venture, Stargate, highlights its significance in the AI space. However, the company’s strained relationship with major customers like Qualcomm remains a challenge as it seeks to grow in new markets such as data centers.

 

AMD Shares Drop 8% Amid Disappointing AI Chip Revenue and Pressure from Nvidia

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Advanced Micro Devices (AMD) saw its stock plunge by 8% on Wednesday after the company’s AI chip revenue fell short of analysts’ expectations, highlighting its struggle to capture market share from the dominant player, Nvidia. AMD’s fourth-quarter data center revenue, which reflects demand for its AI processors, increased by 69% to $3.9 billion. However, this figure missed the consensus estimate of $4.15 billion.

Despite AMD’s success in gaining ground in the central processing unit (CPU) market, the company continues to lag far behind Nvidia in the graphics processing unit (GPU) sector. According to technology analyst Ben Barringer, while AMD is taking market share from Intel in CPUs, it faces significant challenges in disrupting Nvidia’s established position in the GPU market.

The disappointing results led to a $15 billion loss in AMD’s stock market value, further compounded by an 18% decline in shares last year. While AMD’s stock had surged more than 100% in 2023 amid hopes for its AI-optimized GPUs, Nvidia’s stock has skyrocketed by 171% in 2024. The growing trend of tech giants, including Microsoft and Meta, developing in-house chips to reduce costs may also diminish demand for AMD’s processors.

As Nvidia continues to outperform and custom chips gain popularity, BofA analysts noted that AMD could struggle to make significant inroads in the AI chip market. Additionally, the launch of DeepSeek, a low-cost AI model by Chinese firm DeepSeek, has made investors more cautious about heavy spending on AI chips, further undermining confidence in AMD’s prospects.

At least 22 analysts have lowered their price targets for AMD, with the median target now set at $150, down from $166.5 before the results.