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Ambarella: Ambarella's Q3 FY2026 Earnings: A Strong Beat on Revenue and EPS

Ambarella reported a strong third quarter fiscal year 2026 with record quarterly revenue of $108.5 million, exceeding the high end of their guidance range and representing a 31.2% year-over-year increase. Non-GAAP EPS also came in above expectations at $0.27, compared to analyst estimates of $0.21. The company's Edge AI revenue, which accounted for about 80% of total revenue, saw its sixth consecutive quarter of record revenue. The strong performance was driven by increased demand for Edge AI in enterprise security and portable video applications, with IoT revenue growing in the mid-teens sequentially.

AMBA

USD 74.6788

5.09%

A-Score: 3.4/10

Publication date: November 25, 2025

Full Report

Author: Analystock.ai

📋 Highlights
  • Record Q3 Revenue achieved $108.5M, surpassing guidance and marking a 31.2% YoY increase.
  • Edge AI Dominance contributed 80% of total revenue, with 6th consecutive quarterly record in this segment.
  • Upgraded FY2026 Guidance raised to 36-38% revenue growth (vs. prior 31-35%), projecting $390M midpoint.
  • 5nm Technology Adoption generated over 45% of Q3 revenue, with advanced-node products in development.
  • Gross Margin Target maintained at 59-62% long-term, with Q3 guidance at 59-60.5% despite potential consumer market trade-offs.

Revenue Growth and Segment Performance

The company's automotive revenue increased in the low single digits sequentially, while IoT revenue growth was led by the adoption of Edge AI in enterprise security and portable video applications. Notably, the company highlighted the success of their CV5-based products, such as the X4 AIR action camera, which supports 8K 30 frames per second active HDR. Ambarella's new product roadmap is expected to further expand their portfolio, with a focus on advanced technology offerings, including 5-nanometer-based products that represented more than 45% of total Q3 revenue.

Guidance and Outlook

Ambarella raised their fiscal 2026 revenue growth guidance to a range of 36% to 38%, or approximately $390 million at midpoint, up from their prior estimate of 31% to 35% year-over-year growth. For Q4, the company expects revenue in the range of $97 million to $103 million, with non-GAAP gross margin expected to be in the range of 59% to 60.5%. Analysts estimate next year's revenue growth at 39.8%, indicating a continued strong trajectory for the company.

Valuation and Metrics

With a P/S Ratio of 8.47 and an EV/EBITDA of -37.32, Ambarella's valuation suggests that the market is pricing in significant growth expectations. The company's ROE and ROIC are currently negative, at -13.85% and -14.51%, respectively, but the strong revenue growth and expanding margins may indicate a turnaround in the future. As Fermi Wang noted, "We see a large opportunity to execute at the edge with increasingly complex AI technologies," which could drive future growth and improve profitability.

Ambarella's A-Score