The Bull Case For Ambarella (AMBA) Could Change Following Record Revenue And Cautious Market Reaction

• In recent weeks, Ambarella reported record revenue and raised full-year growth guidance to as much as 38%, yet its shares sold off following the late-November earnings release as investors reacted cautiously.
• This tension between strong operational momentum and weak short-term sentiment highlights how market perception, rather than fundamentals alone, is currently steering the debate around Ambarella’s outlook.
• Next, we’ll examine how this disconnect between robust revenue guidance and cautious market sentiment may reshape Ambarella’s investment narrative.

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Ambarella Investment Narrative Recap

To own Ambarella, you need to believe its edge AI chips can convert strong revenue growth into sustainable profitability despite current losses and IoT dependence. The recent selloff after record revenue and raised growth guidance seems to affect sentiment more than the core catalyst, which remains the ramp of higher margin 5 nm AI SoCs. The biggest near term risk, in my view, is that rising R&D and operating costs continue to outpace revenue and delay any path to profits.

The earnings release on 25 November 2025, where management lifted full year revenue growth guidance to 36% to 38%, matters most in this context. It underlines that demand for Ambarella’s edge AI products is still building even as the share price corrects sharply, putting more focus on whether the company can scale these design wins fast enough to offset high operating expenses and its heavy reliance on IoT-driven revenue.

Yet investors should also weigh how quickly rising OpEx and persistent losses could limit Ambarella’s flexibility in a tougher demand patch and...

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 35% upside to its current price.

Exploring Other Perspectives

Seven members of the Simply Wall St Community value Ambarella anywhere between US$31.03 and US$105 per share, with views spread across the entire range. Set that against the current concern that rising R&D and operating costs may keep the company unprofitable for years, and you can see why it pays to review multiple viewpoints before forming your own.

Explore 7 other fair value estimates on Ambarella - why the stock might be worth as much as 45% 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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