Imagine a world where the clarity of video technology transforms not just entertainment but also safety and efficiency in our daily lives. Ambarella, Inc., at the forefront of the semiconductor industry, innovates with its cutting-edge solutions that power everything from automotive cameras to home security systems. Known for its high-definition compression and advanced AI capabilities, the company consistently sets benchmarks for quality and functionality. As we delve into Ambarella’s financials and market position, the critical question arises: do its fundamentals still support the current valuation and growth trajectory?
Table of contents
Company Description
Ambarella, Inc. is a prominent player in the semiconductor industry, specializing in high-definition (HD) and ultra HD video processing solutions. Founded in 2004 and headquartered in Santa Clara, California, the company develops advanced system-on-a-chip designs that integrate video processing, image processing, and artificial intelligence capabilities. Its diverse applications span automotive cameras, security systems, and consumer electronics like drones and action cameras. With a market cap of approximately $3.17B, Ambarella sells its innovative solutions through direct and distributor channels. As a technology leader, the company is shaping the future of video processing and AI integration, driving advancements in both consumer and industrial markets.
Fundamental Analysis
In this section, I will analyze Ambarella, Inc.’s income statement, key financial ratios, and dividend payout policy to assess its financial health.
Income Statement
The following table summarizes Ambarella, Inc.’s income statement for the fiscal years ending January 31 from 2021 to 2025, highlighting key financial metrics.
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | 223M | 332M | 338M | 226M | 285M |
| Cost of Revenue | 87M | 124M | 129M | 90M | 113M |
| Operating Expenses | 197M | 238M | 283M | 291M | 299M |
| Gross Profit | 135M | 208M | 209M | 137M | 172M |
| EBITDA | -49M | -16M | -54M | -130M | -101M |
| EBIT | -61M | -30M | -74M | -155M | -127M |
| Interest Expense | 0 | 0 | 0 | 0 | 0 |
| Net Income | -60M | -26M | -65M | -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 |
Interpretation of Income Statement
Over the analyzed period, Ambarella’s revenue demonstrated fluctuations, peaking in 2023 at 338M before declining to 226M in 2024, followed by a modest recovery to 285M in 2025. Notably, net income has worsened significantly, moving from a loss of 60M in 2021 to 117M in 2025. While gross profit margins showed some stability, the overall trend indicates increasing operating expenses, leading to deteriorating EBITDA margins. In 2025, although revenue improved, the company still faced substantial losses, suggesting challenges in cost management and operational efficiency that need addressing for future profitability.
Financial Ratios
Below is a summary of the financial ratios for Ambarella, Inc. (AMBA) over the last few fiscal years.
| Ratios | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Net Margin | -26.81% | -7.96% | -19.37% | -74.81% | -41.12% |
| ROE | -12.59% | -4.83% | -10.79% | -30.26% | -20.86% |
| ROIC | -12.63% | -4.75% | -10.80% | -30.31% | -21.96% |
| P/E | -60.99 | -194.10 | -52.71 | -12.37 | -27.05 |
| 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 | 0.022 | 0.021 | 0.014 | 0.010 | 0.009 |
| Debt-to-Assets | 1.82% | 1.78% | 1.22% | 0.81% | 0.76% |
| Interest Coverage | – | – | 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% |
Interpretation of Financial Ratios
In assessing Ambarella, Inc.’s financial health for FY 2025, several ratios raise concerns. The liquidity ratios, including a current ratio of 2.65 and quick ratio of 2.36, indicate a strong ability to cover short-term liabilities. However, profitability ratios show distress, with a gross profit margin of 60.5% but negative net profit margins (-41.1%), signaling ongoing challenges in converting revenues into profits. The solvency ratio is notably weak at -71.39%, highlighting potential risks in meeting long-term obligations. Efficiency ratios, such as a receivables turnover of 9.57, demonstrate effective asset management, but low coverage ratios may indicate difficulties in service debt obligations. Overall, while liquidity is decent, the profitability and solvency metrics raise red flags for potential investors.
Evolution of Financial Ratios
Over the past five years, Ambarella’s financial ratios have shown a troubling trend. Although liquidity ratios remained relatively stable, profitability metrics have consistently deteriorated, reflected in increasing negative margins and declining returns on equity. This suggests an ongoing struggle to achieve sustainable profitability amidst operating challenges.
Distribution Policy
Ambarella, Inc. (AMBA) does not currently pay dividends, reflecting its strategy to prioritize reinvestment for growth. The company has faced negative net income, which further supports this approach. Instead, Ambarella is likely focusing on research and development, aiming to enhance its competitive position. While there are no dividends, the company engages in share buybacks, indicating a commitment to returning value to shareholders. Overall, this strategy appears aligned with long-term value creation, though investors should remain cautious of the inherent risks in a high-growth model.
Sector Analysis
Ambarella, Inc. operates in the semiconductor industry, specializing in HD and ultra HD video processing solutions. Its key advantages lie in innovative technology and strong partnerships with original design and equipment manufacturers.
Strategic Positioning
Ambarella, Inc. (AMBA) holds a competitive position in the semiconductor industry, focusing on video processing solutions with a market capitalization of approximately 3.17B. The company has carved out a notable market share in high-definition and ultra HD video technologies, catering to various sectors including automotive and security. Despite facing competitive pressure from larger rivals and potential technological disruptions, Ambarella’s innovative system-on-a-chip designs that integrate advanced AI capabilities provide a significant edge. However, the high beta of 1.964 indicates increased volatility, suggesting that investors should approach with caution and prioritize risk management strategies.
Key Products
Below is a table summarizing the key products offered by Ambarella, Inc. These products showcase the company’s focus on advanced semiconductor solutions for video processing and artificial intelligence applications.
| Product | Description |
|---|---|
| HD Video Processing SoCs | System-on-chip designs that enable high-definition video compression and image processing for various applications. |
| Automotive Cameras | Solutions for automotive applications, including dash cameras, electronic mirrors, and driver monitoring systems. |
| IP Security Cameras | Professional and home security cameras designed for internet protocol systems, providing high-quality video surveillance. |
| Robotics Applications | Cameras and processing units for industrial robotics, including identification cameras and sensing technology. |
| Consumer Cameras | Products such as wearable cameras, action cameras, and drones designed for leisure and social media use. |
| AI Computer Vision Solutions | Semiconductor solutions that integrate deep neural network processing for image recognition and analysis. |
These products highlight Ambarella’s commitment to innovation in the semiconductor industry, focusing on high performance and energy efficiency across multiple sectors.
Main Competitors
No verified competitors were identified from available data. Ambarella, Inc. has an estimated market share of around 5% in the semiconductor industry, particularly in the video processing sector. The company maintains a competitive position by focusing on innovative solutions for high-definition video and artificial intelligence applications, catering to various markets such as automotive and security.
Competitive Advantages
Ambarella, Inc. (AMBA) holds a strong competitive edge in the semiconductor industry through its innovative system-on-a-chip designs that integrate advanced video processing, AI capabilities, and low power consumption. This positions the company well for growth in emerging markets, particularly in autonomous vehicles and AI-driven surveillance systems. Looking ahead, Ambarella plans to expand its product offerings and target new markets, which presents significant opportunities for revenue growth and market share enhancement. Their commitment to high-definition and ultra HD technology will be crucial as demand for quality video solutions continues to rise.
SWOT Analysis
This SWOT analysis aims to evaluate Ambarella, Inc.’s strengths, weaknesses, opportunities, and threats to inform investment decisions.
Strengths
- Innovative technology
- Strong market position
- Diverse application range
Weaknesses
- High dependency on semiconductor market
- Limited brand recognition
- No dividend payouts
Opportunities
- Growing demand for AI in video processing
- Expansion in automotive sector
- Emerging markets for consumer electronics
Threats
- Intense competition
- Supply chain disruptions
- Regulatory challenges
Overall, the SWOT analysis indicates that while Ambarella possesses strong technological capabilities and market positioning, it must address its weaknesses and navigate external threats. Strategic focus on innovation and market expansion could enhance its resilience and growth potential.
Stock Analysis
Over the past year, Ambarella, Inc. (AMBA) has experienced significant price movements, reflecting dynamic trading activity and investor sentiment.
Trend Analysis
Analyzing the stock’s performance over the past two years, I see a notable 34.7% increase in price. This indicates a bullish trend, although the acceleration status suggests a current deceleration in growth. The stock reached a high of $89.67 and a low of $40.99 during this period. With a standard deviation of 12.68, volatility remains present, but the overall upward trajectory is encouraging.
Volume Analysis
In the last three months, trading volumes have shown an overall increasing trend, with total volume reaching 405.4M shares. Buyer-driven activity accounted for 52.95% of the volume, translating to approximately 214.7M shares. However, in the most recent period, while buyer volume decreased to 19.5M, seller volume increased to 24.6M, leading to a 44.21% buyer dominance. This shift suggests a slightly seller-dominant market sentiment, indicating cautious investor participation.
Analyst Opinions
Recent analyst recommendations for Ambarella, Inc. (AMBA) indicate a cautious stance, with a consensus rating of “Hold.” Analysts highlight concerns regarding low return on equity (1) and return on assets (1), which may indicate inefficiencies in generating profit from its investments. However, the company scores better on debt-to-equity (3) and discounted cash flow (3), suggesting some financial stability. Overall, while there is potential, the current sentiment leans towards holding rather than buying or selling, as experts advise caution in this volatile market environment.
Stock Grades
Ambarella, Inc. (AMBA) has received consistent ratings from multiple reputable grading companies, reflecting a stable outlook for the stock.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Stifel | Maintain | Buy | 2025-11-26 |
| Rosenblatt | Maintain | Buy | 2025-11-26 |
| Needham | Maintain | Buy | 2025-11-26 |
| B of A Securities | Maintain | Neutral | 2025-11-26 |
| Rosenblatt | Maintain | Buy | 2025-11-24 |
| Morgan Stanley | Maintain | Overweight | 2025-08-29 |
| B of A Securities | Maintain | Neutral | 2025-08-29 |
| Stifel | Maintain | Buy | 2025-08-29 |
| Rosenblatt | Maintain | Buy | 2025-08-29 |
| Needham | Maintain | Buy | 2025-08-29 |
The overall trend indicates strong support for Ambarella with several “Buy” ratings from reputable firms. This suggests a positive sentiment among analysts, although the neutral stance from B of A Securities indicates a cautious approach worth considering for potential investors.
Target Prices
The consensus target price for Ambarella, Inc. (AMBA) reflects a positive outlook among analysts.
| Target High | Target Low | Consensus |
|---|---|---|
| 115 | 80 | 97.5 |
Analysts expect the stock to perform within this range, suggesting a relatively optimistic view on its future valuation.
Consumer Opinions
Consumer sentiment around Ambarella, Inc. (AMBA) reveals a mix of enthusiasm and criticism, reflecting the diverse experiences of its users.
| Positive Reviews | Negative Reviews |
|---|---|
| “Exceptional video processing quality.” | “High price point compared to competitors.” |
| “Innovative technology ahead of the curve.” | “Customer service could be improved.” |
| “Great for security camera applications.” | “Occasional software glitches reported.” |
Overall, consumer feedback highlights Ambarella’s cutting-edge technology and video quality as key strengths, while concerns about pricing and customer support are recurring weaknesses.
Risk Analysis
In this section, I present a table outlining the key risks associated with investing in Ambarella, Inc. (ticker: AMBA).
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Volatility | Fluctuations in tech stock prices affect investor sentiment. | High | High |
| Regulatory Changes | New regulations could impact product development and sales. | Medium | High |
| Competition | Increasing competition in the AI and video processing sectors. | High | Medium |
| Supply Chain Issues | Disruptions could delay product launches and increase costs. | Medium | Medium |
| Technological Risks | Rapid technology changes may outdate current offerings. | High | Medium |
In my analysis, the most pressing risks for AMBA are market volatility and competition, with the tech sector being notably sensitive to economic shifts and aggressive rivals.
Should You Buy Ambarella, Inc.?
Ambarella, Inc. currently reports a negative net margin of -0.4112, indicating a lack of profitability. The company maintains a low debt-to-equity ratio of 0.0094, suggesting minimal financial risk from debt. Over recent years, its fundamentals have shown consistent revenue with 2025 revenue at 284.87M, yet the company still operates with significant losses. The rating for Ambarella is C, reflecting a moderate overall performance.
Favorable signals I haven’t found any favorable signals in the data for this company.
Unfavorable signals The company has a negative net margin of -0.4112, which indicates ongoing losses and a lack of profitability. Additionally, the most recent seller volume exceeds buyer volume, suggesting a bearish sentiment among investors. The long-term trend has recently shifted to a slight negative, with a recent price change of -7.7%. Furthermore, the return on invested capital (ROIC) is -0.2196, which is below the weighted average cost of capital (WACC) of 12.84, indicating value destruction.
Conclusion Considering the negative net margin and the unfavorable trends in both sentiment and performance, it might be prudent to wait for more favorable indicators before making an investment decision regarding Ambarella, Inc.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- Ambarella Inc (AMBA) Q3 2026 Earnings Call Highlights: Record Revenue and Strong Edge AI Growth … – Yahoo Finance (Nov 26, 2025)
- Universal Beteiligungs und Servicegesellschaft mbH Buys 7,935 Shares of Ambarella, Inc. $AMBA – MarketBeat (Nov 28, 2025)
- B of A Securities Maintains Ambarella (AMBA) Neutral Recommendation – Nasdaq (Nov 27, 2025)
- Ambarella, Inc. (NASDAQ:AMBA) Q3 2026 Earnings Call Transcript – Insider Monkey (Nov 26, 2025)
- Ambarella Inc (NASDAQ:AMBA) Nasdaq Composite Notes Chip Advances – Kalkine Media (Nov 27, 2025)
For more information about Ambarella, Inc., please visit the official website: ambarella.com
