Is Ambarella’s (AMBA) Rising RS Rating Reframing Its Edge AI Chip Story With Investors?

• Earlier this week, coverage highlighted how Ambarella’s push into AI-powered system-on-a-chip solutions for cameras and surveillance has helped lift its Relative Strength Rating from 74 to 81, signaling stronger technical momentum versus the broader market.
• This upgrade underscores how the company’s focus on AI-enabled edge processing is reshaping perceptions of its long-term role in advanced imaging and compute at the device level.
• Now, we’ll explore how this progress in AI-centric chip technology may influence Ambarella’s existing investment narrative around edge AI growth.

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Ambarella Investment Narrative Recap

To own Ambarella, you have to believe that AI-focused, edge-processing chips for cameras, IoT devices and automotive systems can grow into a much larger, more profitable business over time. The recent improvement in Relative Strength Rating suggests stronger technical momentum, but it does not materially change the near term catalyst, which is execution on AI SoC design wins, or the biggest current risk, which remains Ambarella’s reliance on volatile IoT and consumer video demand.

Recent quarterly results give useful context for that RS Rating move. In Q3 FY2026, Ambarella reported US$108.45 million in sales, up from US$82.65 million a year earlier, while narrowing its net loss to US$15.11 million from US$24.07 million. That mix of stronger top line and still negative earnings highlights both the appeal of its edge AI ramp and the risk that rising R&D and operating costs may outpace revenue if growth slows.

Yet investors should also be aware that growing AI revenues do not eliminate the risk that IoT cyclicality and customer concentration could still...

Read the full narrative on Ambarella (it's free!)

Ambarella's narrative projects $526.3 million revenue and $74.3 million earnings by 2028. This requires 14.8% yearly revenue growth and a $162.9 million earnings increase from -$88.6 million today.

Uncover how Ambarella's forecasts yield a $98.09 fair value, a 24% upside to its current price.

Exploring Other Perspectives

Seven fair value estimates from the Simply Wall St Community span roughly US$31 to US$105 per share, reflecting very different expectations. As you weigh those views, remember that Ambarella’s dependence on IoT and consumer video markets ties its performance to cycles in demand, inventory corrections and key customer decisions, which can all influence how those valuations play out over time.

Explore 7 other fair value estimates on Ambarella - why the stock might be worth as much as 33% more than the current price!

Build Your Own Ambarella Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• 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.
• Our free Ambarella research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Ambarella's overall financial health at a glance.

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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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