Ambarella (AMBA) AI Stock Analysis

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Ambarella

(NASDAQ:AMBA)

55Neutral

Ambarella's stock is supported by strong financial stability due to low debt levels and a robust equity position. However, profitability challenges and negative margins remain significant concerns. Technical indicators show strong momentum, yet overbought signals suggest caution. The recent board appointment is a positive governance move, but valuation metrics highlight underlying profitability issues.

Positive Factors

Financial Performance

Ambarella reported results above the midpoint and guided well above expectations.

Product Demand

Ambarella's CV7 family reached production status for the first time with three customers purchasing production quantities, indicating strong demand.

Product Innovation

Innovative product roadmap with high AI exposure and potential for advancements from DeepSeek could be a positive tailwind.

Negative Factors

Market Competition

Ambarella lost a major Western OEM passenger car opportunity due to the incumbent supplier’s scale advantage.

Operating Expenses

Despite high-teens topline growth, elevated operating expenses could limit earnings power over the next several years.

Tariff Uncertainty

Tariff uncertainty may impact customer demand, leading to potential challenges in the second half of the year.

Ambarella (AMBA) vs. S&P 500 (SPY)

Market Cap

$2.69B

Dividend YieldN/A

Average Volume (3M)712.31K

Price to Earnings (P/E)―

Beta (1Y)2.14

Revenue Growth25.78%

EPS Growth32.95%

CountryUS

Employees941

SectorTechnology

Sector Strength76

IndustrySemiconductors

Share Statistics

EPS (TTM)0.11

Shares Outstanding42,413,307

10 Day Avg. Volume585,313

30 Day Avg. Volume712,310

Financial Highlights & Ratios

PEG Ratio-0.73

Price to Book (P/B)4.01

Price to Sales (P/S)0.00

P/FCF Ratio97.38

Enterprise Value/Market Cap0.80

Enterprise Value/Revenue2.20

Enterprise Value/Gross Profit12.39

Enterprise Value/Ebitda-4.26

Forecast

1Y Price Target

$89.44

Price Target Upside40.83% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering10

Ambarella Business Overview & Revenue Model

Company DescriptionAmbarella, Inc. develops semiconductor solutions for video that enable high-definition (HD) and ultra HD compression, image processing, and deep neural network processing worldwide. The company's system-on-a-chip designs integrated HD video processing, image processing, artificial intelligence computer vision algorithms, audio processing, and system functions onto a single chip for delivering video and image quality, differentiated functionality, and low power consumption. Its solutions are used in automotive cameras, such as automotive video recorders, electronic mirrors, front advanced driver assistance system camera, cabin monitoring system and driver monitoring system camera, and central domain controllers for autonomous vehicle; and professional and home internet protocol security camera; robotics and industrial application, including identification/authentication cameras, robotic products, and sensing cameras, as well as cameras for the home, public spaces, and consumer leisure comprising wearable body cameras, sports action cameras, social media cameras, drones for capturing aerial video or photographs, video conferencing, and virtual reality applications. The company sells its solutions to original design manufacturers and original equipment manufacturers through its direct sales force and distributors. Ambarella, Inc. was incorporated in 2004 and is headquartered in Santa Clara, California.

How the Company Makes MoneyAmbarella generates revenue primarily through the sale of its semiconductor products and solutions to original equipment manufacturers (OEMs) and original design manufacturers (ODMs) across various industries. Its key revenue streams include video security, automotive, and consumer electronics sectors. The company licenses its technology and patents to third parties, contributing to its earnings. Ambarella also partners with leading technology firms to integrate its solutions into broader platforms, enhancing its market reach and revenue potential.

Ambarella Key Performance Indicators (KPIs)

Any

Revenue by Geography

Revenue by Geography
Breaks down revenue across different regions, revealing where Ambarella is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.

Chart InsightsAmbarella's revenue in Taiwan has rebounded strongly in 2024 after a significant dip in 2023, indicating a recovery in demand or successful strategic initiatives in the region. Meanwhile, the APAC region shows a modest recovery, but Europe and North America (excluding the U.S.) are experiencing more consistent growth. The U.S. market, however, continues to decline, suggesting potential challenges or strategic shifts away from this geography. Investors should monitor Taiwan's sustained recovery and the U.S. market's trajectory for future growth implications.

Data provided by:

Main Street Data

Ambarella Financial Statement Overview

Summary

Ambarella's financial health is characterized by strong equity and low debt levels, providing financial stability. However, the company faces profitability challenges with consistent net losses and negative margins. The cash flow position is improving, but revenue volatility and ongoing operational losses present risks and opportunities.

Income Statement

Neutral

Ambarella has seen fluctuating revenue growth, with a recent increase of 25.8% from 2024 to 2025, but experienced a decline in prior years. Gross profit margins have remained relatively stable, but the company has consistently reported net losses, leading to negative net profit margins. The persistent negative EBIT and EBITDA margins indicate ongoing operational challenges.

Balance Sheet

Neutral

The balance sheet shows a strong equity position with a low debt-to-equity ratio of 0.01, indicating low leverage, and an equity ratio of 81.5%, suggesting financial stability. However, the negative net income has impacted the return on equity, which remains negative, reflecting profitability challenges.

Cash Flow

Neutral

Ambarella's cash flow statement shows an improvement in operating cash flow, with positive free cash flow in recent years. The free cash flow growth rate has been volatile but showed a significant increase from 2024 to 2025. The operating cash flow to net income ratio is favorable, indicating efficient cash generation despite net losses.

Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Breakdown
Income Statement		Total Revenue
284.87M	226.47M	337.61M	331.86M	222.99M
	Gross Profit
172.33M	136.82M	208.93M	208.13M	135.57M
	EBIT
-126.59M	-154.56M	-74.26M	-29.64M	-61.17M
	EBITDA
-100.53M	-129.75M	-54.32M	-14.63M	-49.20M
	Net Income Common Stockholders
-117.13M	-169.42M	-65.39M	-26.41M	-59.79M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
250.26M	219.93M	206.86M	171.04M	440.71M
	Total Assets
688.97M	657.65M	710.20M	657.54M	573.28M
	Total Debt
5.26M	5.34M	8.64M	11.71M	10.44M
	Net Debt
-139.36M	-139.57M	-104.91M	-159.33M	-230.84M
	Total Liabilities
127.56M	97.78M	104.11M	110.37M	98.30M
	Stockholders Equity
561.41M	559.87M	606.09M	547.18M	474.98M
Cash Flow		Free Cash Flow
23.45M	7.05M	29.04M	29.12M	25.86M
	Operating Cash Flow
33.84M	19.02M	44.09M	38.80M	30.80M
	Investing Cash Flow
-40.53M	7.84M	-107.30M	-119.55M	-31.32M
	Financing Cash Flow
6.40M	4.51M	5.70M	10.53M	10.40M

Ambarella Technical Analysis

Technical Analysis Sentiment

Positive

Last Price63.51

Price Trends

50DMA

50.23

Positive

100DMA

62.26

Positive

200DMA

59.92

Positive

Market Momentum

MACD

3.44

Negative

RSI

77.13

Negative

STOCH

99.24

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AMBA, the sentiment is Positive. The current price of 63.51 is above the 20-day moving average (MA) of 51.24, above the 50-day MA of 50.23, and above the 200-day MA of 59.92, indicating a bullish trend. The MACD of 3.44 indicates Negative momentum. The RSI at 77.13 is Negative, neither overbought nor oversold. The STOCH value of 99.24 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AMBA.

Ambarella Risk Analysis

Ambarella disclosed 72 risk factors in its most recent earnings report. Ambarella reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Ambarella Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CAMT	79 Outperform	$3.01B	24.95	24.82%	2.02%	32.63%	46.16%
SIMO	70 Outperform	$2.13B	22.63	12.33%	3.15%	10.78%	58.82%
SLAB	66 Neutral	$4.27B	―	-14.77%	―	2.16%	-55.38%
IPGP	62 Neutral	$2.83B	―	-9.17%	―	-20.08%	-218.29%
Sector *	60 Neutral	$11.59B	10.39	-7.23%	2.94%	7.46%	-10.76%
AMBA	55 Neutral	$2.69B	―	-20.89%	―	25.78%	32.95%
SMTC	53 Neutral	$3.50B	―	-137.83%	―	4.66%	84.78%

* Technology Sector Average

Performance Comparison

AMBA

Ambarella

63.51

13.74

27.61%

CAMT

Camtek

65.94

-33.91

-33.96%

IPGP

IPG Photonics

66.49

-22.06

-24.91%

SMTC

Semtech

40.42

0.21

0.52%

SLAB

Silicon Laboratories

131.16

-0.46

-0.35%

SIMO

Silicon Motion

63.21

-12.11

-16.08%

Ambarella Earnings Call Summary

Earnings Call Date:Feb 26, 2025

(Q3-2025)

% Change Since: -16.22%|

Next Earnings Date:May 29, 2025

Earnings Call Sentiment Positive

The earnings call reflects a strong performance with significant revenue growth in AI, automotive, and IoT segments, alongside a return to profitability and positive cash flow. However, there are challenges in the automotive market and some volatility in the revenue funnel, which have impacted gross margins.

Q3-2025 Updates

Positive Updates

Record AI Revenue and Growth

Achieved a record level of AI revenue, contributing to a higher blended average selling price. Forecasting fiscal 2025 revenue to increase by 22% to 24% year-over-year.

Strong Performance in Automotive and IoT Segments

Both auto and IoT business revenues increased by about 30% sequentially, driven by new product ramps and higher-priced AI inference processors like CV5.

Non-GAAP Profitability

Returned to non-GAAP profitability in Q3 with a net profit of $4.5 million or $0.11 of earnings per diluted share.

Positive Cash Flow

Generated positive operating cash flow of $6.6 million in the quarter and $8.4 million year-to-date.

Successful Product Launches

Introduced a range of new products including CV72-based cameras, and secured significant customer engagements in both automotive and IoT markets.

Negative Updates

Automotive Market Challenges

Despite growth, the automotive market faces significant pressure with slow global vehicle production growth and delays in Level 2+ market penetration.

Volatility in Automotive Revenue Funnel

6-year automotive revenue funnel reduced from $2.4 billion to $2.2 billion due to project revisions, delays, and cancellations.

Gross Margin Pressure

Non-GAAP gross margin came in at the low end of guidance due to product mix and lower-than-planned margins from legacy processors.

Company Guidance

In the Ambarella Q3 Fiscal Year 2025 earnings call, the company provided robust guidance, reflecting a significant upward revision in their revenue forecast. The company's third-quarter revenue was reported at $82.7 million, exceeding the high end of their guidance range, with a 30% sequential increase. This growth was driven by strong performance in both the automotive and IoT segments, particularly due to new product ramps and higher-priced AI processors like the CV5. Looking forward, Ambarella is projecting a fiscal year 2025 revenue increase of 22% to 24% year-over-year, compared to their prior estimate of mid- to high-teens growth. The company also highlighted their automotive revenue funnel, valued at approximately $2.2 billion over the next six years, and their strategic focus on expanding their presence in the Level 2+ and higher autonomy automotive markets. Additionally, Ambarella is advancing its product roadmap with the upcoming introduction of 2-nanometer technology, expected to tape out in Q4 of the following year, aiming to enhance their competitive position in AI-driven edge processing markets.

Ambarella Corporate Events

Executive/Board ChangesShareholder Meetings

Ambarella Director Anne De Greef-Safft to Depart

Neutral

Apr 4, 2025

On April 2, 2025, Anne De Greef-Safft informed Ambarella, Inc. that she will not stand for re-election to the Board of Directors at the Company’s 2025 annual meeting of shareholders, when her term will expire. Her decision was based on personal reasons, and she has no dispute with the company. The company expressed gratitude for her service.

Executive/Board Changes

Ambarella Appoints Chantelle Breithaupt as Independent Director

Positive

Feb 28, 2025

On February 25, 2025, Ambarella, Inc. appointed Chantelle Breithaupt as an independent director and a member of the Audit Committee, effective immediately. Ms. Breithaupt brings extensive financial leadership experience from her roles at Arista Networks, Aspen Technology, Cisco Systems, and GE, which is expected to strengthen Ambarella’s governance and financial oversight.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.