Ambarella (AMBA) AI Stock Analysis

• Market Cap: $2.39B
• Dividend Yield: N/A
• Average Volume (3M): 831.24K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.96
• Revenue Growth: 48.08%
• EPS Growth: 51.23%
• Country: US
• Employees: 941
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): 0.13
• Shares Outstanding: 43,050,488
• 10 Day Avg. Volume: 1,238,128
• 30 Day Avg. Volume: 831,244
• PEG Ratio: 0.82
• Price to Book (P/B): 5.64
• Price to Sales (P/S): 11.12
• P/FCF Ratio: 135.10
• Enterprise Value/Market Cap: 0.93
• Enterprise Value/Revenue: 5.91
• Enterprise Value/Gross Profit: 9.88
• Enterprise Value/Ebitda: -30.86
• 1Y Price Target: $88.00
• Price Target Upside: 58.82% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9
• EPS Forecast (FY): 0.61
• Revenue Forecast (FY): $428.46M

• Rating: 56 Neutral
• Price Target: $63.00 ▲(13.70% Upside)
• Action: Reiterated Date: 03/03/26
• Date: Action: Reiterated 03/03/26

AMBA scores in the mid-range primarily because financial performance is mixed—solid cash flow and low leverage are offset by ongoing losses and negative ROE. Technical indicators also weigh on the score, with the stock below major moving averages and negative MACD. Offsetting these, the latest earnings call was notably positive with strong growth, product momentum, and constructive FY2027 guidance, but valuation remains challenged due to the negative P/E and lack of dividend support.

Positive Factors

Strong HAI (edge AI) Demand

Sustained ~50% YoY growth in edge AI (HAI) and an installed base of 42M SoCs signal durable end-market adoption. Broad customer deployment (>370 customers) and ~$1B cumulative HAI revenue create recurring design-win momentum and recurring volume potential over multiple product cycles.

Technology Leadership & Roadmap

Progress to 4nm and early 2nm designs and SoCs that support very large models provide a durable competitive edge. Advanced process nodes, broad SoC portfolio, and roadmap to higher parameter support make Ambarella a preferred supplier for power-efficient edge AI across varied OEM programs.

Consistent Cash Generation & Conservative Leverage

Seventeen consecutive years of positive free cash flow and large FCF growth reinforce the firm's ability to fund R&D, product ramps, and working capital internally. Coupled with low leverage (debt-to-equity ~0.023), this supports financial flexibility and durable investment in technology leadership.

Negative Factors

Revenue Concentration Risk

Heavy reliance on a single fulfillment partner for ~70%+ of revenue is a structural vulnerability. It magnifies counterparty, pricing and logistics risk, reduces bargaining leverage with large customers, and could materially affect revenue stability if that channel relationship changes.

Persistently Negative Returns & Net Margins

Despite strong gross margins and revenue growth, negative net margins and ROE indicate the company still struggles to convert top-line into shareholder returns. Higher opex and scale-sensitive costs mean profitability gains remain contingent on sustained revenue expansion and tighter operating leverage.

Rising Opex, Inventory Build & Early-stage Initiatives

Elevated R&D and employee costs plus a material inventory build increase working capital needs and press near-term operating leverage. Early-stage business models (semi-custom ASICs, indirect channel) add execution uncertainty and could prolong margin recovery if investments don't scale as expected.

Ambarella Business Overview & Revenue Model

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.

How the Company Makes Money

Ambarella generates revenue primarily through the sale of its semiconductor products, which includes system-on-chip (SoC) solutions designed for video and image processing. The company has established significant partnerships with leading manufacturers in the security, automotive, and consumer electronics industries, which help drive demand for its products. Key revenue streams include sales from its core video processing chipsets, royalties from licensing its intellectual property, and ongoing support and development services for its technology. Additionally, the increasing trend towards security and surveillance, as well as the growth of autonomous vehicles, contributes to Ambarella's earnings potential by expanding its customer base and product applications.

Ambarella Financial Statement Overview

Summary

Financials are mixed: revenue is growing (TTM +7.41%) and gross margin is healthy (59.78%), with strong free cash flow momentum (TTM FCF growth +66.11%). However, profitability remains weak with negative EBIT and net margins (net margin -21.31%) and negative ROE (-13.85%), despite a conservative balance sheet (debt-to-equity 0.023).

Income Statement

Ambarella's income statement shows a mixed performance. The company has a positive revenue growth rate of 7.41% in the TTM, indicating a recovery from previous declines. However, profitability remains a concern with negative net profit and EBIT margins, reflecting ongoing operational challenges. The gross profit margin is relatively healthy at 59.78%, but the negative net profit margin of -21.31% highlights significant profitability issues.

Balance Sheet

The balance sheet is relatively stable with a low debt-to-equity ratio of 0.023, indicating conservative leverage. However, the return on equity is negative at -13.85%, reflecting the company's inability to generate profit from its equity base. The equity ratio is strong, suggesting a solid capital structure, but the negative ROE points to inefficiencies in asset utilization.

Cash Flow

Cash flow analysis reveals positive trends, with a significant free cash flow growth rate of 66.11% in the TTM. The operating cash flow to net income ratio is 0.36, indicating that cash flow generation is relatively healthy compared to net income. The free cash flow to net income ratio of 0.87 suggests that the company is managing its cash flows effectively despite net losses.

Breakdown	TTM	Jan 2025	Jan 2024	Jan 2023	Jan 2022	Jan 2021
Income Statement
Total Revenue	373.85M	284.87M	226.47M	337.61M	331.86M	222.99M
Gross Profit	223.49M	172.33M	136.82M	208.93M	208.13M	135.57M
EBITDA	-71.55M	-100.53M	-129.75M	-54.32M	-15.64M	-49.20M
Net Income	-79.66M	-117.13M	-169.42M	-65.39M	-26.41M	-59.79M
Balance Sheet
Total Assets	751.89M	688.97M	657.65M	710.20M	657.54M	573.28M
Cash, Cash Equivalents and Short-Term Investments	295.30M	250.26M	219.93M	206.86M	171.04M	440.71M
Total Debt	13.65M	5.26M	5.34M	8.64M	11.71M	10.44M
Total Liabilities	161.78M	127.56M	97.78M	104.11M	110.37M	98.30M
Stockholders Equity	590.11M	561.41M	559.87M	606.09M	547.18M	474.98M
Cash Flow
Free Cash Flow	75.87M	23.45M	7.05M	29.04M	29.12M	25.86M
Operating Cash Flow	80.05M	33.84M	19.02M	44.09M	38.80M	30.80M
Investing Cash Flow	-36.57M	-40.53M	7.84M	-107.30M	-119.55M	-31.32M
Financing Cash Flow	3.89M	6.40M	4.51M	5.70M	10.53M	10.40M

Ambarella Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 55.41
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AMBA, the sentiment is Negative. The current price of 55.41 is below the 20-day moving average (MA) of 64.49, below the 50-day MA of 66.97, and below the 200-day MA of 71.74, indicating a bearish trend. The MACD of -2.27 indicates Positive momentum. The RSI at 31.69 is Neutral, neither overbought nor oversold. The STOCH value of 5.32 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AMBA.

Ambarella Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SIMO	73 Outperform	$4.21B	4.07	15.25%	2.22%	-2.26%	9.74%
CAMT	72 Outperform	$7.56B	95.83	8.70%	―	21.12%	-54.97%
SLAB	67 Neutral	$6.70B	-66.51	-5.97%	―	47.10%	64.29%
POWI	64 Neutral	$2.65B	90.19	3.11%	2.27%	10.50%	-52.00%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
SYNA	61 Neutral	$2.87B	-48.27	-4.49%	―	13.24%	-129.14%
AMBA	56 Neutral	$2.39B	-36.05	-13.12%	―	48.08%	51.23%

Ambarella Corporate Events

Ambarella Adopts New FY2027 Executive Bonus Plan

On February 24, 2026, Ambarella’s board approved a Fiscal Year 2027 Annual Bonus Plan that significantly revises incentive compensation for its executive team, including CEO Feng-Ming Wang and other senior officers. The plan sets Wang’s bonus target at 100% of his fiscal 2027 base salary, with other executives’ targets ranging from 40% to 75%, and increases the aggregate target bonus pool by about 28% compared with the prior year.

Under the FY2027 Bonus Plan, the actual bonus pool to be paid after fiscal 2027 will depend on Ambarella’s performance against revenue, operating profit and specified non-financial operational objectives, each weighted one-third for executive management. The move underscores the company’s emphasis on tying leadership pay more closely to measurable performance outcomes, potentially sharpening management’s focus on both financial results and key operational milestones.

The most recent analyst rating on (AMBA) stock is a Buy with a $78.00 price target. To see the full list of analyst forecasts on Ambarella stock, see the AMBA Stock Forecast page.

Ambarella Adds Veteran Director as Edge AI Business Grows

On February 23, 2026, Ambarella’s board appointed veteran semiconductor executive Gregory M. Bryant as an independent director and member of its compensation committee, granting him standard non‑employee director pay and a $150,000 RSU award vesting through September 2026. The move brings board‑level experience from Intel and Analog Devices, as well as his venture work in healthcare and technology, potentially strengthening Ambarella’s strategic oversight as it scales its edge AI franchise.

For the fourth quarter of fiscal 2026 ended January 31, Ambarella reported revenue of $100.9 million, up 20.1% year on year, with GAAP gross margin slipping to 58.4% and GAAP net loss narrowing to $16.4 million, while non‑GAAP net profit rose to $5.5 million. For the full fiscal year, revenue climbed 37.2% to a record $390.7 million, GAAP net loss narrowed to $75.9 million, and non‑GAAP results swung to a $26.9 million profit, even as margins eased, highlighting improving operating leverage.

The company ended the quarter with $312.6 million in cash, cash equivalents and marketable securities, up from both the prior quarter and year‑ago period, and has $48 million remaining under an extended share repurchase program that runs through June 30, 2026. While Ambarella did not repurchase stock in the fourth quarter and bought only about $1 million of shares earlier in fiscal 2026, the authorization provides capital allocation flexibility amid ongoing investment in edge AI products and channels.

Management said edge AI SoCs accounted for 80% of fiscal 2026 revenue and cited roughly $1 billion in cumulative edge AI sales, 12 AI SoCs, support for models up to 34 billion parameters and more than 370 customer AI projects in production as evidence of its technology lead. These metrics, along with guidance for first‑quarter fiscal 2027 revenue of $97 million to $103 million and steady non‑GAAP gross margins, signal Ambarella’s deepening focus on diversified physical AI deployments and indirect sales and ASIC models, with implications for continued growth despite recent GAAP losses.

The most recent analyst rating on (AMBA) stock is a Hold with a $77.00 price target. To see the full list of analyst forecasts on Ambarella stock, see the AMBA Stock Forecast page.