S&P 500 slips, but losses kept in check as Nvidia climbs ahead of results
On Friday, Needham analysts adjusted their outlook on Ambarella (NASDAQ:AMBA), reducing the price target from $110.00 to $90.00, but maintained a Buy rating on the stock. Currently trading at $62, with analyst targets ranging from $49.60 to $110, the stock shows significant potential upside according to Wall Street consensus. Ambarella reported first-quarter results for fiscal year 2026 that surpassed the midpoint of expectations and provided a second-quarter forecast that is above market consensus. InvestingPro analysis indicates the stock is currently overbought, with particularly strong momentum over the past month.
The company has updated its revenue growth projections for fiscal year 2026, now expecting an increase of 19%-25% year-over-year, compared to the previous guidance of mid-to-high teens percentage growth. This projection builds on the company’s strong revenue growth of 25.8% over the last twelve months. This outlook includes a cautious stance regarding the second half of the fiscal year due to uncertainties related to tariffs. InvestingPro subscribers can access 8 additional key insights about Ambarella’s financial health and growth prospects through exclusive ProTips.
Ambarella’s Strategic Addressable Market (SAM) is witnessing expansion from endpoint devices to edge infrastructure. With a solid financial foundation, including a current ratio of 2.65 and more cash than debt on its balance sheet, the company is well-positioned for this expansion. The management has disclosed ongoing development of next-generation processors aimed at further penetrating the edge infrastructure market. This move signifies Ambarella’s efforts to stay at the forefront of technological advancements and market needs.
The company is also experiencing a diversification of its business. Security cameras now represent less than half of Ambarella’s total revenue. The automotive sector accounts for approximately 25% of the revenue, while the remaining 30%-35% is derived from consumer-facing markets. This shift indicates a strategic broadening of Ambarella’s revenue streams beyond its traditional stronghold in security cameras.
The revised price target to $90.00 by Needham reflects a more conservative approach in their Discounted Cash Flow (DCF) model. Despite the reduced target, Needham’s continuing Buy rating suggests confidence in Ambarella’s fundamental strength and future potential in the market.
In other recent news, Ambarella Inc . reported its Q1 FY2026 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $0.07, compared to the forecasted $0.04. The company’s revenue also exceeded predictions, coming in at $85.9 million against the anticipated $84.01 million. This performance marks a significant year-over-year revenue growth of 57.6%, showcasing the company’s robust operational execution. Ambarella has raised its fiscal year revenue growth guidance to a range of 19-25%, reflecting confidence in continued expansion, particularly in AI and edge infrastructure products. The company is focusing on emerging markets, including robotics and automotive, as part of its growth strategy. Analysts from firms like Susquehanna and Stifel have noted the company’s strong product cycle and expansion into edge infrastructure, indicating a positive outlook for the future. Despite geopolitical uncertainties, Ambarella maintains a strong position in the market, with its AI-driven strategy contributing significantly to its revenue. The company continues to innovate, with plans to develop new AI SoC products to enhance its edge AI infrastructure roadmap.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.