Ambarella (NASDAQ: AMBA) declined in pre-market trading on Wednesday after the artificial intelligence (AI) semiconductor company announced disappointing second quarter results. The company’s losses narrowed in Q2 to an adjusted loss of $0.15 per diluted share as compared to an adjusted loss of $0.20 in the same period last year. However, analysts were expecting the company to report a loss of $0.13 per share.
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Adding to the pain, the company’s revenues fell 23% year-over-year to $62.1 million and were below Street estimates of $67.8 million.
Fermi Wang, Ambarella’s President and CEO commented, “The near-term environment is very challenging, as customers are now more aggressively reducing their inventory, and we are now seeing some pockets of weak end-market demand, which further complicates our customers’ efforts to reduce their inventory. We anticipate our customers’ inventory levels will normalize by the end of the year and set us up for a return to growth in the next fiscal year.”
Looking forward, the company has projected Q3 revenues of $50 million plus or minus 4% while adjusted gross margin is expected to be between 62% and 64%. Ambarella’s management stated that over the mid-to-long term, its outlook regarding its AI inference processor business remains “positive.”
Analysts are cautiously optimistic about AMBA stock with a Moderate Buy consensus rating based on eight Buys, four Holds and one Sell.
