High Resolution Radar Adoption Will Transform Long Term Prospects Across Automotive And Nonautomotive Markets

Catalysts

About Arbe Robotics

Arbe Robotics develops high resolution radar chipsets and systems for advanced driver assistance and autonomous driving, as well as nonautomotive applications.

What are the underlying business or industry changes driving this perspective?

• Potential selection as the radar provider for an eyes off, hands off automated driving program at a major European OEM could position Arbe at the core of next generation passenger vehicle platforms. This would be expected to lift chipset shipment volumes and long term revenue.
• Ongoing Level 3 and Level 4 development programs with multiple premium European and Japanese OEMs, including expanded predevelopment activities, create a pipeline of programs that can transition from evaluation kits to serial production and support future revenue visibility and earnings.
• Industry wide adoption of high resolution radar as a key sensor in ADAS and autonomous driving, supported by Arbe’s awards for perception and sensor technology, may help it gain share against lower end radar solutions and support better pricing power and gross margin potential.
• Growing nonautomotive demand in defense, smart cities and maritime, including repeat orders and new boating applications via Sensrad and WATCHIT, broadens the revenue base beyond light vehicles and can help smooth earnings and utilization of R&D investment.
• Collaboration with a global leader in artificial intelligence computing that is using Arbe radar kits for full stack autonomous software development ties the company into the wider AI and autonomy ecosystem. This can support future chipset demand, higher revenue and improved operating leverage.

Assumptions

This narrative explores a more optimistic perspective on Arbe Robotics compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming Arbe Robotics's revenue will grow by 409.1% annually over the next 3 years.
• The bullish analysts are not forecasting that Arbe Robotics will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Arbe Robotics's profit margin will increase from -7077.5% to the average US Electronic industry of 8.5% in 3 years.
• If Arbe Robotics's profit margin were to converge on the industry average, you could expect earnings to reach $7.5 million (and earnings per share of $0.06) by about January 2029, up from $-47.2 million today.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 77.2x on those 2029 earnings, up from -3.1x today. This future PE is greater than the current PE for the US Electronic industry at 25.5x.
• The bullish analysts expect the number of shares outstanding to grow by 3.51% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.85%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The investment case leans heavily on future OEM design wins, but management also highlights repeated delays in OEM decision timelines and new model launches. If those decisions slip again or Arbe is not selected, radar chipset volumes for passenger vehicles could stay very low and keep revenue and earnings constrained for longer than expected.
• Despite a long-term focus on high resolution radar for ADAS and autonomous driving, current automotive revenue is very small at US$0.3 million in Q3 2025 with a backlog of US$0.2 million. If industry adoption of Arbe’s level of radar performance is slower than anticipated or OEMs favor alternative sensor mixes, that reliance on a future ramp could limit growth in revenue and delay any improvement in net margins.
• The company is still running at a significant loss, with Q3 2025 operating expenses of US$11.3 million, an operating loss of US$11.5 million and adjusted EBITDA loss of US$9.2 million. If the planned revenue ramp in both automotive and nonautomotive segments takes longer or comes in smaller than hoped, ongoing cash burn could pressure the US$52.6 million net cash balance and extend the period of weak earnings.
• Management expects most 2026 revenue to come from nonautomotive uses such as defense, smart cities and maritime, yet current activity is described as pilot programs, evaluation projects and a single boating customer via Sensrad. If these projects do not scale into larger, recurring orders, the nonautomotive segment may not be able to offset variability in OEM programs, which would weigh on revenue stability and operating leverage.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Arbe Robotics is $3.5, which represents up to two standard deviations above the consensus price target of $2.42. This valuation is based on what can be assumed as the expectations of Arbe Robotics's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $3.5, and the most bearish reporting a price target of just $1.75.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $88.0 million, earnings will come to $7.5 million, and it would be trading on a PE ratio of 77.2x, assuming you use a discount rate of 10.9%.
  
• Given the current share price of $1.36, the analyst price target of $3.5 is 61.1% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.