Why Ambarella (AMBA) Is Up 16.9% After Raising Revenue Outlook and Highlighting Edge AI Demand

• Ambarella, Inc. recently reported second-quarter results for fiscal 2026, with sales rising to US$95.51 million and a significantly smaller net loss compared to the prior year, while also raising its full-year revenue growth outlook to 31%–35%.
• The company highlighted strong demand for its 5nm AI SoCs and expansion into edge AI applications in automotive, IoT, and robotics, underscoring rising adoption and diversification of its core technologies.
• We’ll explore how Ambarella’s upgraded revenue outlook, driven by edge AI market traction, may impact its long-term investment narrative.

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Ambarella Investment Narrative Recap

To be a shareholder in Ambarella, you need confidence in its ability to capture edge AI growth, especially in fast-growing areas like automotive, robotics, and IoT, and to transition improving revenue into eventual profitability. The recent surge in quarterly results and upgraded revenue guidance significantly strengthen the case for Ambarella’s AI-powered growth story, though margin pressures from development costs and pricing competition remain a key short-term watchpoint.

The most relevant recent announcement is Ambarella’s raised revenue outlook for fiscal 2026, now expecting 31%–35% annual growth. This signals expanding order volumes for its advanced AI SoCs and shows the company’s execution against its edge AI catalysts, but it does not fully address possible risks around rising operational expenses or supply chain dependencies.

By contrast, investors should keep a close eye on how persistent cost pressures might influence profitability, especially if...

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

Ambarella's narrative projects $487.9 million revenue and $69.2 million earnings by 2028. This requires 15.6% yearly revenue growth and a $172.7 million increase in earnings from -$103.5 million.

Uncover how Ambarella's forecasts yield a $90.05 fair value, a 9% upside to its current price.

Exploring Other Perspectives

Six members of the Simply Wall St Community present fair value estimates for Ambarella ranging from US$31.03 to US$95.42 per share. While optimism about edge AI revenue growth abounds after the latest results, these diverging views show investors should consider multiple scenarios for company performance.

Explore 6 other fair value estimates on Ambarella - why the stock might be worth less than half 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 1 key reward 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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