Stifel maintains buy on Ambarella stock, reiterates $80 price target

Published 30/05/2025, 14:30
Stifel maintains buy on Ambarella stock, reiterates $80 price target

On Friday, Stifel analysts reiterated their Buy rating and $80.00 price target on Ambarella (NASDAQ:AMBA) shares. According to InvestingPro data, while the company maintains strong financial health with more cash than debt and excellent liquidity ratios, current market pricing suggests the stock is trading above its Fair Value. The firm’s analysts highlighted the company’s modest first-quarter fiscal year 2026 beat, with revenue reaching $85.9 million, a 2.2% increase quarter over quarter, surpassing Stifel’s estimate of $84.0 million. This growth was attributed to the Internet of Things (IoT) sector’s performance, which compensated for a sequential decline in the Automotive segment. The company maintains a healthy gross profit margin of 60.3% and has achieved impressive revenue growth of 44.5% over the last twelve months.

Ambarella’s second-quarter fiscal year 2026 revenue guidance was also a focal point, with the midpoint forecast at $90.0 million, marking a 4.8% growth quarter over quarter. This projection notably exceeded Stifel’s prior estimate of $84.8 million by 6.1%, underlined by robust demand for the company’s edge AI inference processors.

Stifel’s analysts remain optimistic about Ambarella’s prospects, noting that the company has consistently outperformed expectations. Despite a conservative outlook for the second half of fiscal year 2026 due to an uncertain macroeconomic environment, management has observed no indicators of inventory accumulation that could suggest a downturn in decisions related to procurement.

The reiterated Buy rating comes with a 12-month price target of $80, which Stifel bases on an 8.2x calendar year 2026 estimated enterprise value-to-sales multiple. This valuation reflects confidence in Ambarella’s continued performance and market position in the edge AI processor space. While currently unprofitable, InvestingPro analysis reveals analysts expect profitability this year. Discover more insights and 5 additional ProTips about Ambarella in the comprehensive Pro Research Report, part of the in-depth analysis available for over 1,400 US stocks.

In other recent news, Ambarella reported impressive first-quarter results for fiscal year 2026, surpassing analysts’ expectations with a revenue of $85.9 million and earnings per share (EPS) of $0.07, compared to the forecasted $84 million and $0.04, respectively. The company has updated its full-year revenue growth guidance to a range of 19-25%, reflecting confidence in its edge AI technology and expanding market opportunities. Ambarella’s strategic focus on edge AI infrastructure is evident as it plans to release a new chip to further penetrate this market, addressing a growing demand for AI solutions. Despite the positive financial performance, KeyBanc and Oppenheimer have maintained their cautious stances on Ambarella’s stock, reiterating Sector Weight and Perform ratings, respectively, due to macroeconomic uncertainties.

Needham, on the other hand, has adjusted its price target for Ambarella from $110 to $90, while maintaining a Buy rating, indicating confidence in the company’s long-term potential despite near-term challenges. Ambarella’s diversification efforts are notable, with security cameras now accounting for less than half of its total revenue, while the automotive sector contributes approximately 25%. The company’s robust performance is driven by strong demand in the Internet of Things (IoT) segment and edge AI technology, although the automotive sector has experienced some deceleration. These developments highlight Ambarella’s ongoing strategic realignment and its efforts to capitalize on emerging opportunities in AI infrastructure and other markets.

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