Domo signs strategic collaboration agreement with AWS for AI solutions
On Monday, Rosenblatt Securities reaffirmed its positive stance on Ambarella stock (NASDAQ:AMBA), maintaining a Buy rating and a price target of $100.00. Trading at $74.61, the stock sits well above its 52-week low of $39.69, with InvestingPro data showing 10 analysts recently revising their earnings estimates upward for the upcoming period. The firm's analyst, Kevin Cassidy, highlighted the potential impact of DeepSeek's advancements in Large Language Models (LLMs) on the acceleration of network edge AI applications.
Cassidy pointed out that the market is currently intrigued by DeepSeek, a China-based company that has reportedly developed a competitive LLM which operates at a lower cost and with less dependency on the leading-edge GPU technology from Nvidia (NASDAQ:NVDA). Although details regarding the exact cost and the specific GPUs used by DeepSeek are not clear, the development is seen as a significant step towards broadening the use of AI applications at the network edge.
The analyst emphasized that the availability of another LLM is beneficial for companies in the network edge AI processor market. Ambarella, with its $3.1 billion market cap and beta of 1.66 indicating higher market sensitivity, along with CEVA (NASDAQ:CEVA), Qualcomm (NASDAQ:QCOM), and Synaptics (NASDAQ:SYNA), were mentioned as companies that stand to gain from this proliferation of AI applications. According to InvestingPro's analysis, Ambarella maintains strong liquidity with a current ratio of 2.84, though investors should note the company's overall financial health score is currently rated as weak.
In line with this perspective, Rosenblatt also reiterated Buy ratings and price targets for other companies in the sector: CEVA with a $35 price target, Qualcomm with a $250 price target, and Synaptics with a $92 price target. Cassidy's comments suggest a positive outlook for these companies due to their involvement in network edge AI processors, which are expected to benefit from the expansion of AI applications facilitated by developments like those from DeepSeek. For deeper insights into Ambarella's valuation and growth prospects, investors can access comprehensive analysis and additional ProTips through InvestingPro's detailed research reports, available for over 1,400 US stocks.
In other recent news, semiconductor design company Ambarella has been making significant strides in its financial performance, with a 63% year-over-year revenue increase to $82.7 million reported for the third quarter of fiscal year 2025. This substantial growth was primarily driven by robust demand for its AI and edge computing solutions, particularly in the automotive and IoT markets. As a result, several analyst firms have adjusted their outlooks on Ambarella. Needham, Rosenblatt Securities, Susquehanna, and Stifel have all increased their price targets while maintaining positive ratings.
Additionally, Ambarella has entered into a significant lease agreement for new executive offices in Santa Clara, California, aligning with the company's strategic plans for growth and expansion. The lease encompasses approximately 57,871 square feet of office space at 3001 Tasman Drive. The company is in a strong financial position with more cash than debt and a healthy current ratio of 2.84, which has facilitated this expansion.
Furthermore, despite facing project delays and cancellations, Ambarella's management remains optimistic about the company's growth trajectory. AI-related revenue now constitutes approximately 70% of the total revenue. The company also provided a midpoint revenue guidance of $78.0 million for the fourth quarter of fiscal year 2025 and forecasts a 22-24% revenue growth for fiscal 2025, with continued growth expected in both automotive and IoT segments into fiscal 2026. These are the latest developments in the company's ongoing progress.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.