Ambarella (AMBA) AI Stock Analysis

• Market Cap: $2.84B
• Dividend Yield: N/A
• Average Volume (3M): 801.22K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.95
• Revenue Growth: 48.08%
• EPS Growth: 51.23%
• Country: US
• Employees: 941
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): 0.27
• Shares Outstanding: 43,050,488
• 10 Day Avg. Volume: 561,367
• 30 Day Avg. Volume: 801,222
• 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: 0.98
• Enterprise Value/Revenue: 7.40
• Enterprise Value/Gross Profit: 12.38
• Enterprise Value/Ebitda: -38.68
• 1Y Price Target: $96.70
• Price Target Upside: 46.01% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 11
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 56 Neutral
• Price Target: $66.00 ▼(-0.35% Downside)

Overall score reflects solid balance sheet strength and improving cash flow, plus a constructive earnings call with raised FY2026 growth guidance and strong Edge AI momentum. These are tempered by ongoing GAAP profitability issues (negative margins/ROE), near-term technical weakness (below key moving averages with negative MACD), and an unfavorable valuation signal from the negative P/E.

Positive Factors

Edge AI momentum

Ambarella's shift to Edge AI, now ~80% of revenue with six straight quarters of record Edge AI sales, reflects durable product-market fit. This concentration in AI-enabled video processing supports sticky OEM relationships, recurring design wins, and cross-market adoption across security, automotive, and portable video.

Record revenue & raised guidance

Achieving record quarterly revenue and a material upward revision to FY2026 guidance indicates strengthening end-market demand and successful execution. Higher multi-quarter growth guidance suggests sustainable secular adoption of Ambarella's products rather than a one-off spike, improving predictability of medium-term top-line expansion.

Strong cash generation & low leverage

Robust free cash flow growth combined with minimal financial leverage provides strategic flexibility. Strong cash conversion despite GAAP losses allows continued R&D investment, customer support, and potential opportunistic M&A without stressing the balance sheet, supporting durable operational resilience over months.

Negative Factors

Negative profitability metrics

Despite revenue gains, persistently negative net and operating margins and a materially negative ROE indicate the company still struggles to convert gross margins into sustainable profits. This structural profitability gap constrains retained earnings growth and limits long-term returns on shareholder capital absent sustained margin recovery.

Gross margin pressure from customer mix

Management warns margin compression driven by the revenue mix toward high-volume customers. If large customers continue to command lower pricing or different product mixes, structural margin erosion could reduce operating leverage and profitability potential, limiting the firm's ability to scale net income as revenues grow.

Seasonality & consumer market volatility

The company cites predictable seasonal downturns and rising exposure to volatile consumer end markets. These structural cyclicality and exposure patterns can create uneven revenue streams, complicate capacity planning and resource allocation, and increase the risk of recurring quarter-to-quarter performance swings.

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

Mixed fundamentals: revenue is growing (7.41% TTM) and gross margin is strong (59.78%), but profitability remains weak with negative EBIT and net margins (net margin -21.31%). Balance sheet leverage is very conservative (debt-to-equity 0.023) but ROE is negative (-13.85%). Cash flow is a strength with strong free cash flow growth (66.11% TTM) and solid cash conversion despite net losses.

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: Neutral
• Last Price: 66.23
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AMBA, the sentiment is Neutral. The current price of 66.23 is above the 20-day moving average (MA) of 65.08, below the 50-day MA of 69.15, and below the 200-day MA of 71.37, indicating a neutral trend. The MACD of -0.92 indicates Negative momentum. The RSI at 49.19 is Neutral, neither overbought nor oversold. The STOCH value of 73.79 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AMBA.

Ambarella Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SIMO	73 Outperform	$4.51B	36.33	15.25%	2.22%	-2.26%	9.74%
CAMT	72 Outperform	$7.21B	165.25	8.70%	―	21.12%	-54.97%
SLAB	67 Neutral	$6.77B	―	-5.97%	―	47.10%	64.29%
POWI	64 Neutral	$2.55B	117.11	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	$3.28B	-52.18	-4.49%	―	13.24%	-129.14%
AMBA	56 Neutral	$2.84B	-35.19	-13.92%	―	48.08%	51.23%

Ambarella Corporate Events

Ambarella CTO Leslie Kohn Resigns, Shifts to Advisory Role

On November 24, 2025, Leslie Kohn resigned from his roles as a director and Chief Technology Officer at Ambarella for personal reasons, transitioning to a part-time role as Chief Technology Advisor. Ambarella reported a significant financial performance for the third quarter of fiscal year 2026, with a 31.2% increase in revenue compared to the previous year, and a notable improvement in non-GAAP net profit. The company also provided optimistic guidance for the fourth quarter, highlighting strong growth and a promising outlook for edge AI applications.

The most recent analyst rating on (AMBA) stock is a Buy with a $90.00 price target. To see the full list of analyst forecasts on Ambarella stock, see the AMBA Stock Forecast page.