Ambarella (NASDAQ:AMBA) Sees Strong Trading Volume Following Strong Earnings

Key Points

• Ambarella beat quarterly expectations: Revenue rose 13.2% year over year to $108.1 million, while non-GAAP EPS of $0.18 topped the $0.17 consensus estimate. Management also reported record edge-AI revenue and highlighted its upcoming X7 AI Accelerator.
• Near-term outlook remains solid but margins are under pressure: Fiscal Q3 revenue guidance of $115 million to $124 million implies sequential growth, but GAAP net losses persisted and gross margin declined to 57.7%.
• The stock fell despite the earnings beat amid valuation concerns: Craig Hallum downgraded AMBA to “hold,” while the broader analyst consensus remains “hold” with a $94.22 price target. Shares traded at $59.93 after previously closing at $63.38.

Ambarella, Inc. (NASDAQ:AMBA - Get Free Report) saw unusually-high trading volume on Friday following a better than expected earnings announcement. 851,793 shares were traded during mid-day trading, a decline of 33% from the previous session's volume of 1,267,195 shares.The stock last traded at $59.93 and had previously closed at $63.38.

The semiconductor company reported $0.18 earnings per share for the quarter, topping the consensus estimate of $0.17 by $0.01. The company had revenue of $108.12 million for the quarter, compared to analyst estimates of $107.76 million. Ambarella had a negative return on equity of 10.94% and a negative net margin of 17.18%.Ambarella's revenue for the quarter was up 13.2% compared to the same quarter last year. During the same quarter last year, the firm earned $0.15 EPS.

Ambarella News Summary

Here are the key news stories impacting Ambarella this week:

• Positive Sentiment: Ambarella reported fiscal Q2 revenue of $108.1 million, up 13.2% year over year and slightly above the $107.8 million consensus estimate. Non-GAAP EPS of $0.18 also exceeded expectations, while non-GAAP net income rose from $6.4 million to $8.2 million. Ambarella second-quarter fiscal 2027 financial results
• Positive Sentiment: Management said edge-AI revenue reached a record level, supported by its 5nm CV75 and CV72 AI systems-on-chip. The company also highlighted its upcoming X7 stand-alone AI Accelerator, which could expand its addressable market.
• Positive Sentiment: New long-term agreements with Macnica and Capgemini are intended to broaden Ambarella’s distribution, engineering and systems-integration reach across the Americas, EMEA and enterprise markets. Ambarella and Macnica distribution agreement
• Neutral Sentiment: Fiscal Q3 revenue guidance of $115 million to $124 million brackets the $119.3 million analyst consensus, indicating solid sequential growth but no significant forecast increase. Cash, cash equivalents and marketable securities totaled $272.3 million at quarter-end.
• Negative Sentiment: GAAP net loss remained at $6.7 million, and GAAP gross margin declined to 57.7% from 58.9% a year earlier. Non-GAAP Q3 gross-margin guidance of 59% to 60% also suggests continued near-term margin pressure.
• Negative Sentiment: Craig Hallum downgraded AMBA from “buy” to “hold” and set a $70 price target. Bank of America analyst Vivek Arya also maintained a hold view, citing elevated valuation and near-term margin uncertainty. The downgrade is likely the main catalyst behind the stock’s decline despite the earnings beat.

Analysts Set New Price Targets

AMBA has been the topic of several analyst reports. Craig Hallum lowered shares of Ambarella from a "buy" rating to a "hold" rating and set a $70.00 target price on the stock. in a report on Friday. Consumer Edge reiterated a "buy" rating on shares of Ambarella in a research report on Friday, May 22nd. Susquehanna upped their target price on shares of Ambarella from $80.00 to $110.00 and gave the company a "positive" rating in a research report on Friday, May 29th. Summit Insights cut shares of Ambarella from a "buy" rating to a "hold" rating in a research report on Friday, May 29th. Finally, Needham & Company LLC reissued a "buy" rating on shares of Ambarella in a research note on Friday. Five equities research analysts have rated the stock with a Buy rating, six have issued a Hold rating and one has given a Sell rating to the company's stock. According to data from MarketBeat.com, Ambarella currently has a consensus rating of "Hold" and a consensus target price of $94.22.

Insider Activity at Ambarella

In other Ambarella news, insider Chan W. Lee sold 2,951 shares of Ambarella stock in a transaction on Wednesday, June 17th. The shares were sold at an average price of $67.87, for a total value of $200,284.37. Following the sale, the insider directly owned 157,098 shares in the company, valued at approximately $10,662,241.26. The trade was a 1.84% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this link. Also, VP Chi-Hong Ju sold 10,000 shares of the company's stock in a transaction dated Wednesday, July 1st. The stock was sold at an average price of $88.84, for a total value of $888,400.00. Following the sale, the vice president owned 155,924 shares in the company, valued at $13,852,288.16. The trade was a 6.03% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Insiders sold 58,519 shares of company stock valued at $4,595,475 over the last ninety days. Company insiders own 4.50% of the company's stock.

Hedge Funds Weigh In On Ambarella

A number of institutional investors have recently added to or reduced their stakes in AMBA. California State Teachers Retirement System increased its stake in shares of Ambarella by 8,490.9% during the 2nd quarter. California State Teachers Retirement System now owns 4,116,598 shares of the semiconductor company's stock worth $353,204,000 after purchasing an additional 4,068,680 shares during the last quarter. Price T Rowe Associates Inc. MD lifted its holdings in shares of Ambarella by 2,312.6% during the fourth quarter. Price T Rowe Associates Inc. MD now owns 864,610 shares of the semiconductor company's stock worth $61,250,000 after buying an additional 828,773 shares in the last quarter. UBS Group AG raised its stake in Ambarella by 379.3% in the 3rd quarter. UBS Group AG now owns 821,747 shares of the semiconductor company's stock worth $67,811,000 after purchasing an additional 650,306 shares in the last quarter. Squarepoint Ops LLC bought a new stake in shares of Ambarella in the second quarter valued at approximately $36,810,000. Finally, The Manufacturers Life Insurance Company lifted its position in shares of Ambarella by 49.5% during the 1st quarter. The Manufacturers Life Insurance Company now owns 1,586,082 shares of the semiconductor company's stock valued at $81,644,000 after acquiring an additional 524,937 shares during the period. 82.09% of the stock is currently owned by institutional investors and hedge funds.

Ambarella Price Performance

The firm has a market cap of $2.67 billion, a P/E ratio of -37.86 and a beta of 2.09. The company's 50-day moving average is $74.31 and its two-hundred day moving average is $68.23.

About Ambarella

Ambarella, Inc is a global semiconductor company headquartered in Santa Clara, California, specializing in video compression, image processing and computer vision technologies. The company designs low-power, high-definition system-on-chip (SoC) solutions that enable the capture, processing and streaming of video in a variety of embedded applications. Ambarella's platforms combine advanced video encoding, multi-core central processing units and hardware accelerators to deliver high-resolution imaging with low power consumption.

Ambarella's product portfolio caters to multiple markets, including security and surveillance, automotive vision, wearable cameras, drones and robotics.

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