Ambarella's analyst price target has seen a significant upward revision, rising by as much as $37 to $100 per share. Analysts cite robust Q2 performance, design wins in IoT and Edge AI, and an improved revenue outlook as key drivers of optimism.
Analyst Commentary
Following Ambarella's Q2 results, analysts provided a range of perspectives on the company's performance, outlook, and valuation. While there was broad optimism regarding near-term growth drivers and execution, some caution remains around market dependencies and longer-term opportunities.
Bullish Takeaways- Bullish analysts highlight Ambarella’s strong Q2 results, citing robust revenue that exceeded expectations and an improved outlook for the upcoming quarters.
- Diversification within the Internet of Things segment is noted as a key growth catalyst, with recent design wins in areas such as portable cameras, drones, and non-automotive Edge AI applications.
- The expansion of the addressable market, driven by emerging sectors like autonomous robotics and 360-degree cameras, is viewed as an inflection point for sustained outperformance into fiscal 2027.
- Momentum in Edge AI and enterprise infrastructure markets is expected to provide additional revenue uplift and improved average selling prices, which supports higher valuations.
- Bearish analysts maintain a cautious stance on auto segment weakness, noting that softness in automotive demand could offset gains in other areas.
- Despite the positive edge AI trends, some analysts reiterate neutral ratings and cite uncertainty around the timing and scale of major automotive design wins needed for further upside.
- There is also some concern regarding the sustainability of elevated sales estimates because the company’s growth remains reliant on the ramp of newer applications.
What's in the News
- Ambarella revised its fiscal year 2026 revenue guidance and now expects growth in the range of 31% to 35%, which translates to approximately $379 million at the midpoint (Key Developments).
- The company issued new earnings guidance for Q3 2025 and projects revenue between $100.0 million and $108.0 million (Key Developments).
- Ambarella completed the repurchase of 49,871 shares for $2 million as part of its ongoing buyback program announced in 2019 (Key Developments).
Valuation Changes
- Fair Value Estimate remains unchanged at $93.73 per share.
- The discount rate has risen slightly, from 10.06% to 10.09%.
- Revenue growth expectation has declined marginally, from 14.91% to 14.88%.
- Net profit margin has decreased modestly, from 13.88% to 13.69%.
- The future Price/Earnings (P/E) ratio has increased moderately, from 76.73x to 77.87x.
Disclaimer
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