Arm Holdings shares tumbled 8% in extended trading on Wednesday, after the chip tech provider issued quarterly forecasts that disappointed investors, in part because of its plans to invest a portion of its profit into building its own chips and other components.

The chip designer's results and guidance were not good enough to support its highly valued stock, but its attractive business model makes it worth watching.

Shares of the chipmakers Arm Holdings Plc and Qualcomm Inc. were both heading lower in today’s after-hours trading session. The decline in Arm’s stock was perhaps understandable, given its mixed results,