Ambarella (AMBA) Narrows Q3 Net Losses but Margins Still Pressure Bullish Narratives

Ambarella (AMBA) just posted its Q3 2026 results, reporting $108.5 million in revenue and basic EPS of -$0.35 as net losses continued. Looking back, the company has seen revenue trend from $63.7 million in Q2 2025 up to $108.5 million this quarter, while EPS has remained negative throughout. Margins remain under pressure, making profitability the key question on investors’ minds this quarter.

See our full analysis for Ambarella.

Now, let's put these results to the test and see how they match up against the dominant narratives that have shaped expectations so far. Some assumptions may get reinforced, while others will be up for debate.

See what the community is saying about Ambarella

Losses Narrow Even as Margins Lag

• Net income for Q3 2026 was -$15.1 million, improving from -$19.9 million in the prior quarter. Trailing twelve-month net losses still totaled -$79.7 million and margins show no sign of a turnaround.
• According to the consensus narrative, while Ambarella’s revenue growth is robust—trailing 12-month sales were $373.9 million—the business remains unprofitable and profit margins have yet to improve.
  • The streak of negative net income extends well past the quarter, with the company not expected to achieve profitability within the next three years.
  • Consensus narrative highlights that ongoing investments and lack of near-term margin improvement have kept Ambarella’s profit growth from accelerating, despite revenue gains.
• Consensus sees revenue momentum, but continued losses and flat profit margins create a stubborn roadblock.

Consensus says this persistent loss position is limiting Ambarella's ability to capitalize fully on sector growth: 📈 Read the full Ambarella Consensus Narrative.📊 Read the full Ambarella Consensus Narrative.

Valuation Premium Despite Persistent Losses

• Ambarella’s Price-to-Sales Ratio is 8.4x, topping both the peer group average of 6x and the U.S. semiconductor industry average of 4.5x. Investors are paying a substantial premium for anticipated growth.
• Analysts' consensus view points out that the current share price of $73.89 remains below their price target of 98.09, but believe high valuation hinges on steep future improvements:
  • To justify this premium, the consensus estimates Ambarella needs to lift revenue to $526.3 million and swing to $74.3 million in earnings by 2028, all while shifting profit margins from -25.5% to an industry average of 14.1%.
  • Consensus cautions that, even with revenue growth, persistence of negative net income may make this valuation a stretch unless profitability improves swiftly.

Revenue Growth Beats Market, But Risks Mount

• Ambarella’s revenue is forecast to grow at 12.02% annually, outpacing the US market’s 10.5% average and signaling strong top-line momentum.
• Analysts' consensus view also highlights that this strength is tempered by mounting risks:
  • The company’s dependence on volatile IoT and single large customers, coupled with substantial inside selling, could undermine growth stability if demand or client commitment wavers.
  • Consensus narrative stresses that margin pressures and delays in automotive growth, previously pitched as the next big opportunity, are weighing on longer-term visibility for profits and diversification.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Ambarella on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your Ambarella research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

See What Else Is Out There

With persistent losses, a lack of profitability, and high valuation premiums that rely on significant future turnarounds, Ambarella’s weakness lies in its profitability outlook and the risks associated with its premium price.

If you want more value for your money, check out these 929 undervalued stocks based on cash flows for stocks currently trading below their intrinsic value and offering stronger upside potential now.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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