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Ambarella, Inc. revolutionizes how we capture and process visual data, powering everything from advanced driver assistance systems in vehicles to cutting-edge security and consumer cameras. As a semiconductor innovator, Ambarella integrates AI-driven video compression and image processing into sleek, energy-efficient chips that define industry standards. Renowned for its technological leadership and market influence, the company stands at the forefront of a rapidly evolving sector. The key question for investors now is whether Ambarella’s robust innovation pipeline and market positioning still justify its current valuation and growth expectations.
Table of contents
Business Model & Company Overview
Ambarella, Inc., founded in 2004 and headquartered in Santa Clara, California, is a leader in the semiconductor industry. The company offers an integrated ecosystem of system-on-a-chip solutions, blending HD and ultra HD video compression, image processing, and AI-driven computer vision. This core business supports a diverse range of applications from automotive safety cameras to professional security and consumer electronics, underscoring its role as a pioneer in advanced video technology.
Ambarella’s revenue engine balances high-performance hardware with sophisticated software algorithms, driving value through its low-power, high-quality video processing chips. Its strategic market footprint spans the Americas, Europe, and Asia, serving original design and equipment manufacturers worldwide. The company’s competitive advantage lies in its unique integration of video and AI technology, establishing a robust economic moat that positions it at the forefront of the evolving semiconductor landscape.
Financial Performance & Fundamental Metrics
In this section, I analyze Ambarella, Inc.’s income statement, key financial ratios, and dividend payout policy to assess its fundamental health and investment potential.
Income Statement
The table below presents Ambarella, Inc.’s income statement figures for fiscal years 2021 through 2025, reflecting revenue, expenses, profitability, and earnings per share.
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| Revenue | 223M | 332M | 338M | 226M | 285M |
| Cost of Revenue | 87.4M | 124M | 129M | 89.7M | 113M |
| Operating Expenses | 197M | 238M | 283M | 291M | 299M |
| Gross Profit | 136M | 208M | 209M | 137M | 172M |
| EBITDA | -49.2M | -15.6M | -54.3M | -130M | -101M |
| EBIT | -61.2M | -29.6M | -74.3M | -155M | -127M |
| Interest Expense | 0 | 0 | 0 | 0 | 0 |
| Net Income | -59.8M | -26.4M | -65.4M | -169M | -117M |
| EPS | -1.72 | -0.72 | -1.70 | -4.25 | -2.84 |
| Filing Date | 2021-03-31 | 2022-04-01 | 2023-03-31 | 2024-03-29 | 2025-03-28 |
Income Statement Evolution
Between 2021 and 2025, Ambarella, Inc. saw a favorable revenue growth of 27.75%, with a notable 25.78% increase in the last year, reflecting top-line expansion. However, net income declined sharply by 95.91% over the period, resulting in persistent negative net margins, though gross margins remained steady and favorable at 60.5%. Operating expenses grew in line with revenue, supporting margin stability despite continued net losses.
Is the Income Statement Favorable?
In 2025, Ambarella posted $285M revenue, up 25.78% year-over-year, with gross profit also rising 25.96% to $172M, yielding a strong 60.5% gross margin. Despite this, operating income was negative at -$127M, with an unfavorable EBIT margin of -44.44% and net margin of -41.12%. The company reported a net loss of $117M but showed improvements in net margin and EPS growth, indicating some positive momentum amid ongoing fundamental challenges.
Financial Ratios
The table below presents key financial ratios for Ambarella, Inc. over the last five fiscal years, offering a snapshot of profitability, valuation, liquidity, leverage, efficiency, and dividend metrics:
| Ratios | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Net Margin | -27% | -8% | -19% | -75% | -41% |
| ROE | -13% | -5% | -11% | -30% | -21% |
| ROIC | -12% | -5% | -11% | -27% | -22% |
| P/E | -61 | -194 | -53 | -12 | -27 |
| P/B | 7.68 | 9.37 | 5.69 | 3.74 | 5.64 |
| Current Ratio | 6.72 | 2.99 | 3.65 | 3.38 | 2.65 |
| Quick Ratio | 6.37 | 2.48 | 3.16 | 3.03 | 2.36 |
| D/E | 0.02 | 0.02 | 0.01 | 0.01 | 0.01 |
| Debt-to-Assets | 2% | 2% | 1% | 1% | 1% |
| Interest Coverage | 0 | 0 | 0 | 0 | 0 |
| Asset Turnover | 0.39 | 0.50 | 0.48 | 0.34 | 0.41 |
| Fixed Asset Turnover | 14.68 | 15.61 | 16.75 | 14.44 | 19.96 |
| Dividend Yield | 0% | 0% | 0% | 0% | 0% |
Evolution of Financial Ratios
From 2021 to 2025, Ambarella’s Return on Equity (ROE) deteriorated significantly, reaching -20.86% in 2025, indicating worsening profitability. The Current Ratio improved from a high of 6.72 in 2021 to a still healthy 2.65 in 2025, reflecting solid liquidity. Meanwhile, the Debt-to-Equity ratio remained very low and stable around 0.01, demonstrating minimal leverage over the period.
Are the Financial Ratios Favorable?
In 2025, Ambarella showed unfavorable profitability metrics with a negative net margin of -41.12% and ROE at -20.86%, alongside an unfavorable weighted average cost of capital (WACC) of 13.04%. Liquidity ratios such as the Current Ratio (2.65) and Quick Ratio (2.36) were favorable, supported by low debt levels (D/E 0.01). Asset turnover was weak at 0.41, while fixed asset turnover was strong at 19.96. Overall, 57.14% of key ratios were unfavorable, suggesting challenges in profitability and efficiency despite healthy liquidity and low leverage.
Shareholder Return Policy
Ambarella, Inc. does not pay dividends, reflecting its ongoing negative net income and reinvestment focus. The company maintains positive free cash flow but prioritizes operational and strategic investments over shareholder distributions. No share buyback programs are reported.
This policy aligns with Ambarella’s growth and development phase, supporting long-term value creation through reinvestment rather than immediate returns. The absence of dividends and buybacks suggests a cautious approach to sustaining capital for future expansion amid current profitability challenges.
Score analysis
The radar chart below presents a detailed view of Ambarella, Inc.’s key financial scores across multiple valuation and performance metrics:
Ambarella shows a moderate discounted cash flow score of 3 and a favorable debt-to-equity score of 4, indicating solid leverage management. However, return on equity and assets are very unfavorable at 1 each, while valuation metrics like price-to-earnings score are also weak at 1, and price-to-book is moderate at 2.
Analysis of the company’s bankruptcy risk
Ambarella’s Altman Z-Score places the company well within the safe zone, signaling very low bankruptcy risk and financial stability:
Is the company in good financial health?
The Piotroski Score diagram below illustrates the company’s financial health based on nine accounting criteria:
With a Piotroski score of 3, Ambarella is classified as very weak, indicating limited financial strength despite other positive factors, and suggesting challenges in profitability and operational efficiency.
Competitive Landscape & Sector Positioning
This sector analysis will explore Ambarella, Inc.’s strategic positioning, revenue by segment, key products, main competitors, competitive advantages, and SWOT analysis. I will assess whether Ambarella holds a competitive advantage relative to its peers in the semiconductor industry.
Strategic Positioning
Ambarella, Inc. operates a diversified portfolio of semiconductor solutions focused on video and AI processing, serving automotive, security, robotics, and consumer markets. Geographically, it relies heavily on Taiwan with over $179M revenue in 2025, complemented by smaller but consistent sales across Asia Pacific, Europe, and North America.
Key Products & Brands
The following table outlines Ambarella, Inc.’s key products and their respective descriptions:
| Product | Description |
|---|---|
| System-on-a-Chip Designs | Integrated HD video processing, image processing, AI computer vision algorithms, audio processing, and system functions on a single chip. |
| Automotive Cameras | Solutions for automotive video recorders, electronic mirrors, front ADAS cameras, cabin and driver monitoring systems, and central domain controllers for autonomous vehicles. |
| Internet Protocol Security Cameras | Professional and home security cameras using IP technology. |
| Robotics and Industrial Cameras | Cameras for identification/authentication, robotic products, and sensing applications in industrial environments. |
| Consumer and Leisure Cameras | Includes wearable body cameras, sports action cameras, social media cameras, drones for aerial video/photos, video conferencing, and virtual reality applications. |
Ambarella’s product portfolio centers on high-definition video semiconductor solutions catering to automotive, security, industrial, and consumer markets, emphasizing integrated AI and low power consumption technologies.
Main Competitors
There are 38 competitors in the Semiconductors industry, with the table below listing the top 10 leaders by market capitalization:
| Competitor | Market Cap. |
|---|---|
| NVIDIA Corporation | 4.6T |
| Broadcom Inc. | 1.6T |
| Taiwan Semiconductor Manufacturing Company Limited | 1.6T |
| ASML Holding N.V. | 415B |
| Advanced Micro Devices, Inc. | 363B |
| Micron Technology, Inc. | 353B |
| Lam Research Corporation | 232B |
| Applied Materials, Inc. | 214B |
| QUALCOMM Incorporated | 185B |
| Intel Corporation | 173B |
Ambarella, Inc. ranks 33rd among 38 competitors in the Semiconductors industry, with a market capitalization approximately 0.06% of the leader, NVIDIA Corporation. The company is positioned below both the average market cap of the top 10 competitors (975B) and the sector median (31B). Ambarella has a 4.27% market cap gap to the next competitor above it.
Does AMBA have a competitive advantage?
Ambarella, Inc. does not currently present a competitive advantage, as its return on invested capital (ROIC) is significantly below its weighted average cost of capital (WACC), indicating value destruction and declining profitability. The company’s ROIC trend over 2021-2025 has been sharply negative, highlighting ongoing challenges in generating excess returns.
Looking ahead, Ambarella’s future outlook includes opportunities in automotive cameras, professional and home security, robotics, and virtual reality markets, driven by its system-on-a-chip solutions integrating AI and HD video processing. These expanding applications could provide growth avenues despite the current unfavorable profitability metrics.
Comparisons with competitors
Check out how we compare the company to its competitors:
SWOT Analysis
This SWOT analysis highlights Ambarella, Inc.’s key strategic factors to guide investment decisions.
Strengths
- Strong revenue growth of 25.78% in 2025
- Diverse applications in automotive, security, robotics
- High current and quick ratios indicating liquidity
Weaknesses
- Negative net margin at -41.12%
- Declining ROIC and value destruction
- Very weak Piotroski score of 3
Opportunities
- Expanding markets in autonomous vehicles and AI-driven cameras
- Growing demand in Asia Pacific and Taiwan markets
- Potential to improve EBIT and net margin profitability
Threats
- Intense competition in semiconductor industry
- High beta of 1.953 indicating stock volatility
- Economic and geopolitical risks impacting supply chain
Ambarella demonstrates solid top-line growth and liquidity but suffers from profitability challenges and value erosion. Strategic focus on operational efficiency and leveraging growth in autonomous tech and emerging markets is crucial to mitigate risks and improve financial health.
Stock Price Action Analysis
The weekly stock price chart for Ambarella, Inc. (AMBA) highlights price movements and volatility patterns over the past 12 months:
Trend Analysis
Over the past 12 months, AMBA’s stock price increased by 17.55%, indicating a bullish trend with deceleration in momentum. The price ranged between a low of 40.99 and a high of 89.67. The overall volatility is moderate with a standard deviation of 12.8. However, the recent 2.5-month period shows a -25.07% decline, reflecting a short-term bearish slope of -1.9.
Volume Analysis
In the last three months, trading volume has increased overall, with sellers dominating at 82.1% of volume, indicating a seller-driven market. This suggests weakening investor confidence and increased selling pressure, which may signal cautious sentiment or profit-taking behavior.
Target Prices
The consensus target prices for Ambarella, Inc. indicate a moderately optimistic outlook among analysts.
| Target High | Target Low | Consensus |
|---|---|---|
| 115 | 80 | 97.5 |
Analysts expect Ambarella’s stock price to range between $80 and $115, with a consensus target around $97.5, reflecting cautious confidence in its growth potential.
Analyst & Consumer Opinions
The following section examines the latest analyst ratings and consumer feedback regarding Ambarella, Inc. (AMBA) performance and reputation.
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Stock Grades
Here is the latest summary of stock grades for Ambarella, Inc. from recognized financial institutions as of late 2025:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| B of A Securities | Maintain | Neutral | 2025-11-26 |
| Needham | Maintain | Buy | 2025-11-26 |
| Rosenblatt | Maintain | Buy | 2025-11-26 |
| Stifel | Maintain | Buy | 2025-11-26 |
| Rosenblatt | Maintain | Buy | 2025-11-24 |
The consensus leans clearly toward a “Buy” rating with most firms maintaining positive outlooks, while B of A Securities holds a neutral stance, reflecting a cautious but generally favorable market sentiment.
Consumer Opinions
Ambarella, Inc. has sparked diverse consumer sentiments, reflecting both strong product appreciation and areas for improvement.
| Positive Reviews | Negative Reviews |
|---|---|
| “Excellent video processing quality, perfect for security cams.” | “Customer support response time is slower than expected.” |
| “Innovative AI features have significantly improved my projects.” | “Price point is a bit high compared to competitors.” |
| “Reliable performance with consistent software updates.” | “Some compatibility issues with third-party hardware.” |
Overall, consumers praise Ambarella’s advanced video technology and innovation, while common complaints focus on customer service delays and premium pricing.
Risk Analysis
Below is a table summarizing the key risks associated with Ambarella, Inc., including their likelihood and potential impact on investment returns:
| Category | Description | Probability | Impact |
|---|---|---|---|
| Financial Health | Negative profitability with net margin at -41.12% and unfavorable ROE and ROIC indicates losses. | High | High |
| Market Volatility | High beta of 1.95 suggests stock price is sensitive to market swings, increasing investment risk. | High | Medium |
| Liquidity Risk | Although current and quick ratios are favorable, interest coverage is zero, limiting debt service. | Medium | Medium |
| Valuation Risk | Price-to-book ratio of 5.64 and negative PE ratio reflect expensive valuation and earnings risk. | Medium | High |
| Operational Risk | Dependence on semiconductor sector and tech innovation cycles could affect revenue stability. | Medium | Medium |
| Bankruptcy Risk | Altman Z-Score of 10.89 places company in safe zone, reducing bankruptcy risk significantly. | Low | Low |
| Financial Strength | Piotroski score of 3 indicates very weak financial strength, signaling potential fundamental issues. | High | High |
The most concerning risks are Ambarella’s weak profitability and financial strength, alongside high market volatility. Despite a strong Altman Z-Score indicating low bankruptcy risk, persistent losses and a very weak Piotroski score highlight caution. Recent financials show negative returns and high valuation multiples, which may increase downside risk for investors.
Should You Buy Ambarella, Inc.?
Ambarella, Inc. appears to be facing a challenging profitability profile with declining operational efficiency and a deteriorating competitive moat indicating value destruction. Despite a manageable leverage profile and a safe-zone Altman Z-score, the overall rating of C+ suggests moderate financial health with significant risk considerations.
Strength & Efficiency Pillars
Ambarella, Inc. exhibits strong financial stability as evidenced by an Altman Z-Score of 10.89, placing it safely in the “safe zone” and signaling low bankruptcy risk. The company’s debt management is notably robust, with a debt-to-equity ratio of 0.01 and a current ratio of 2.65, highlighting excellent liquidity and low leverage. Gross margins stand favorably at 60.5%, supporting operational efficiency. However, key profitability metrics such as ROE at -20.86% and ROIC at -21.96% remain negative and below the WACC of 13.04%, indicating that Ambarella is currently not a value creator and is destroying value.
Weaknesses and Drawbacks
Several financial indicators raise concerns for investors. The company’s net margin is deeply negative at -41.12%, reflecting ongoing profitability challenges. The price-to-book ratio is elevated at 5.64, suggesting a premium valuation that may not be fully justified by fundamentals. Despite a favorable price-to-earnings ratio due to negative earnings, this metric is less meaningful given losses. Moreover, recent market behavior shows clear seller dominance with only 17.9% buyer presence from November 2025 to January 2026, resulting in a 25.07% price decline and signaling short-term headwinds.
Our Verdict about Ambarella, Inc.
Ambarella presents an unfavorable long-term fundamental profile given its negative returns and value destruction. While the overall stock trend remains bullish with a 17.55% gain over the broader period, the recent seller-dominant phase and price pullback suggest caution. Despite strong financial health and liquidity, the negative profitability and declining returns imply that Ambarella may appear risky for long-term exposure, and investors might consider a wait-and-see approach for a more favorable entry point.
Disclaimer: This content is for informational purposes only and does not constitute financial, investment, or other professional advice. Investing in financial markets involves a significant risk of loss, and past performance is not indicative of future results.
Additional Resources
- Ambarella, Inc. (NASDAQ:AMBA) Receives Consensus Rating of “Moderate Buy” from Analysts – MarketBeat (Jan 19, 2026)
- Ambarella Inc (AMBA) Q3 2026 Earnings Call Highlights: Record Revenue and Strong Edge AI Growth … – Yahoo Finance (Nov 26, 2025)
- An Ambarella Insider Just Sold 7,728 Shares. Here’s What Investors Should Know – The Motley Fool (Jan 12, 2026)
- AMBA Ambarella, Inc. NASDAQ pre-market 16 Jan 2026: $64.80 signals AI camera growth gap – Meyka (Jan 16, 2026)
- Ambarella’s Stock Boosted by Launch of CV7 Edge AI Vision Chip – timothysykes.com (Jan 17, 2026)
For more information about Ambarella, Inc., please visit the official website: ambarella.com
