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Investing.com -- Ambarella (NASDAQ:AMBA) reported better-than-anticipated earnings and revenue for the fourth quarter of fiscal 2025 and issued a solid guidance for the current quarter, but shares fell 3% after the market open Thursday.
The company’s stock initially rose sharply in the premarket trade, before reversing gains.
Ambarella posted earnings per share (EPS) of $0.11, well ahead of the $0.02 loss per share expected by analysts.
Revenue came in at $84 million, ahead of the consensus projection of $78.03 million.
The company’s non-GAAP gross margin for the quarter was 62.0%, slightly lower than the 62.5% reported in the same period of fiscal 2024.
“We finished fiscal 2025 with strong results and are starting the new year with positive momentum,” said Fermi Wang, President & CEO of Ambarella.“We exited the year with more than 70% of our total revenue from edge AI, representing both a quarterly and annual record.”
“In fiscal 2026, we anticipate mid to high teens revenue growth, led by our 5nm products, including the ongoing ramp in the CV5 family and now the CV7 family, which generated production revenue for the first time in Q4,” he added.
For the first quarter of fiscal 2026 (FY26), Ambarella projects revenue in the range of $81 million to $87 million, well above the consensus estimate of $74.22 million.
Needham analysts highlighted that “more than half of the incremental revenue growth” is expected to come from the CV5 and CV7 product families in FY26.
“CV2 is also expected to continue to grow. However, management is incorporating conservatism into F2H26 due to uncertainty surrounding the impact of government policy decisions (tariffs),” they added.
The investment bank models Ambarella’s FY26 gross margin to be “near the high end of the long term target range of 59-62%.”
Needham raised its price target on the stock to $110 from $100 after the print.