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1. Company Snapshot

1.a. Company Description

Ambarella, 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.

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1.b. Last Insights on AMBA

Ambarella's recent performance was driven by strong Q1 earnings, with EPS beating estimates and revenues surging 58% year-over-year on record Edge AI sales. The company's quarterly earnings of $0.07 per share exceeded the Zacks Consensus Estimate of $0.04 per share. Ambarella's Edge AI semiconductor business is gaining traction, with growing demand for its solutions. The company will hold its second-quarter fiscal year 2026 earnings conference call on August 28, 2025. According to some analysts, Ambarella is considered a buy, with near-unanimous ratings (Source: various analysts).

1.c. Company Highlights

2. 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.

Publication Date: Nov -30

📋 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.

3. NewsRoom

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Prediction: This Artificial Intelligence (AI) Stock Will Be Worth More Than SoundHound AI in 2026

Dec -04

Source: fool.com

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Ambarella, Inc. (AMBA) Presents at UBS Global Technology and AI Conference 2025 Transcript

Dec -03

Source: seekingalpha.com

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Ambarella, Inc. $AMBA Shares Bought by Creative Planning

Nov -29

Source: defenseworld.net

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Why Ambarella Stock Just Crashed

Nov -26

Source: fool.com

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Ambarella Q3 Earnings Beat Estimates, Revenues Jump More Than 31% Y/Y

Nov -26

Source: zacks.com

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Ambarella, Inc. (AMBA) Q3 2026 Earnings Call Transcript

Nov -26

Source: seekingalpha.com

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Ambarella (AMBA) Surpasses Q3 Earnings and Revenue Estimates

Nov -25

Source: zacks.com

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Ambarella, Inc. Announces Third Quarter Fiscal Year 2026 Financial Results

Nov -25

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (14.00%)

6. Segments

Video Compression, Image Processing and Computer Vision Solutions

Expected Growth: 14%

Ambarella's 14% growth in Video Compression, Image Processing, and Computer Vision Solutions is driven by increasing demand for high-definition video, autonomous vehicles, and smart home devices. Additionally, advancements in AI and machine learning, growing adoption of 4K and 8K resolutions, and rising need for efficient data processing and storage contribute to the segment's growth.

7. Detailed Products

CV22

A high-performance AI-enabled computer vision processor for smart home security cameras, doorbells, and other IoT devices.

CV25

A high-performance AI-enabled computer vision processor for professional surveillance cameras, smart cities, and industrial IoT applications.

CV28

A high-performance AI-enabled computer vision processor for automotive applications, including advanced driver-assistance systems (ADAS) and autonomous vehicles.

H22

A high-performance processor for 4K and 8K video recording and playback in action cameras, drones, and other consumer electronics.

H3

A high-performance processor for 4K and 8K video recording and playback in professional broadcast and cinematography applications.

S5L

A high-performance processor for 4K and 8K video recording and playback in security cameras and other IoT devices.

8. Ambarella, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Ambarella, Inc. faces moderate threat from substitutes due to the presence of alternative video processing solutions from competitors like Intel and Texas Instruments.

Bargaining Power Of Customers

Ambarella, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products are highly customized, making it difficult for customers to switch to alternative suppliers.

Bargaining Power Of Suppliers

Ambarella, Inc. relies on a few key suppliers for components like memory and semiconductors. While the company has some bargaining power due to its size, suppliers still have some leverage due to the specialized nature of these components.

Threat Of New Entrants

The video processing market has high barriers to entry due to the need for significant investments in research and development, as well as the requirement for specialized expertise. This limits the threat of new entrants.

Intensity Of Rivalry

The video processing market is highly competitive, with several established players like Intel, Texas Instruments, and HiSilicon. Ambarella, Inc. faces intense competition in terms of pricing, product features, and innovation.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 0.94%
Debt Cost 3.95%
Equity Weight 99.06%
Equity Cost 12.19%
WACC 12.11%
Leverage 0.95%

11. Quality Control: Ambarella, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Wolfspeed

A-Score: 4.3/10

Value: 9.6

Growth: 0.9

Quality: 5.1

Yield: 0.0

Momentum: 10.0

Volatility: 0.0

1-Year Total Return ->

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Stock-Card
SiTime

A-Score: 3.7/10

Value: 6.2

Growth: 2.4

Quality: 3.2

Yield: 0.0

Momentum: 8.5

Volatility: 2.0

1-Year Total Return ->

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Stock-Card
Ambarella

A-Score: 3.4/10

Value: 4.2

Growth: 1.6

Quality: 4.2

Yield: 0.0

Momentum: 8.0

Volatility: 2.3

1-Year Total Return ->

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Stock-Card
Silicon Labs

A-Score: 3.4/10

Value: 4.6

Growth: 1.9

Quality: 3.0

Yield: 0.0

Momentum: 6.5

Volatility: 4.3

1-Year Total Return ->

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Stock-Card
Allegro MicroSystems

A-Score: 3.2/10

Value: 2.4

Growth: 1.7

Quality: 3.7

Yield: 0.0

Momentum: 7.5

Volatility: 3.7

1-Year Total Return ->

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Stock-Card
Power Integrations

A-Score: 2.8/10

Value: 1.6

Growth: 2.0

Quality: 5.8

Yield: 3.0

Momentum: 1.0

Volatility: 3.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

74.1$

Current Price

74.1$

Potential

-0.00%

Expected Cash-Flows