Chip designer Arm Holdings on Wednesday reported a stronger-than-expected 39% surge in quarterly revenue, and forecast fiscal second-quarter sales broadly in line with Wall Street estimates, yet its shares fell about 9% in extended trading.

For the current fiscal second quarter, Arm forecast revenue in a range between $780m and $830m, compared with an average analyst estimate of $804.1m, according to LSEG data.

“We’re seeing more investment [in artificial intelligence] than we saw even 90 days ago,” the chief financial officer, Jason Child, said in an interview with Reuters.

Arm’s first-quarter revenue rose 39% to $939m, exceeding analyst estimates of $902.7m.

The UK chip designer reported first-quarter earnings of 40 cents per share, adjusted for stock-based compensation, among other things. Analysts expected earnings of 34 cents a share.

Arm generates revenue from licensing fees for its semiconductor designs and collects a royalty for each chip sold that uses its technology.

Arm’s designs power nearly every smartphone in the world, and the company has attempted to make headway in data centers and other markets. Chips with Arm technology generate $200bn a year of revenue for the many chipmakers that sell them, according to research from TD Cowen.

Bets that Arm will benefit from a surge in AI computing have nearly tripled the chip designer’s share price since its initial public offering last September, giving it market value of about $140bn. The shares recently traded at roughly 75 times expected earnings, compared with about 31 times earnings for the heavyweight chipmaker Nvidia, according to LSEG data.

Though Arm’s designs are found adjacent to chips that power AI applications, the company’s revenue and profit have not benefited from AI to the same degree as Nvidia’s.