Update shared on30 Aug 2025
Fair value Increased 16%Ambarella’s analyst price target has been notably raised to $90.05, driven by stronger-than-expected Q2 results and momentum in Edge AI and IoT applications outside automotive, despite continued sector softness.
Analyst Commentary
- Bullish analysts cite Ambarella's strong Q2 performance, with revenue and earnings surpassing expectations and exceeding prior guidance.
- Edge AI and IoT applications, particularly outside the automotive segment, are seen as key near-term growth drivers, with notable traction in portable video, drones, and enterprise infrastructure.
- New design wins and product cycles are driving diversification and ASP (average selling price) uplift, expanding Ambarella's addressable market and fueling revenue momentum.
- While optimism persists for AI-enabled growth, several analysts maintain a neutral stance due to ongoing softness and delays in the automotive segment.
- Ambarella is regarded as a potential strategic acquisition target, with management acknowledging scale benefits but emphasizing a strong standalone growth outlook.
What's in the News
- Ambarella is working with bankers to explore potential strategic options, including a sale, and has reached out to potential buyers such as chip rivals and private equity firms; on this news, shares surged 19-21%, reaching a market value between $2.3B and $2.6B (Bloomberg/key developments).
- There is no certainty that the current sale talks will result in a transaction, and Ambarella has declined to comment on ongoing deliberations (key developments/Bloomberg).
- Ambarella was dropped from multiple major Russell value indexes at the end of June 2025, which may affect institutional investor flows (key developments).
- The company issued earnings guidance for the fiscal Q3 ending October 31, 2025, expecting revenue between $100 million and $108 million (key developments).
- Ambarella raised its fiscal 2026 revenue growth estimate to 31%-35%, projecting approximately $379 million at the midpoint (key developments).
Valuation Changes
Summary of Valuation Changes for Ambarella
- The Consensus Analyst Price Target has significantly risen from $77.72 to $90.05.
- The Future P/E for Ambarella has risen from 68.92x to 74.56x.
- The Consensus Revenue Growth forecasts for Ambarella has fallen slightly from 15.6% per annum to 14.8% per annum.
Disclaimer
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