Ambarella, Inc. is revolutionizing how we capture and process video, impacting everything from autonomous vehicles to home security. As a leader in the semiconductor industry, Ambarella is renowned for its cutting-edge system-on-a-chip designs that integrate advanced image processing and artificial intelligence. With a commitment to quality and innovation, the company continues to push boundaries. As I analyze Ambarella’s current market position, I will explore whether its fundamentals still support its valuation and growth potential.
Table of contents
Company Description
Ambarella, Inc. is a prominent player in the semiconductor industry, specializing in high-definition video processing and imaging solutions. Founded in 2004 and headquartered in Santa Clara, California, the company has carved a niche in developing system-on-a-chip designs that integrate advanced functions such as artificial intelligence and low-power consumption. Ambarella’s products cater to a diverse range of applications, including automotive cameras, security systems, and consumer electronics like drones and action cameras. With a market cap of approximately 3.16B and a robust presence in global markets, Ambarella positions itself at the forefront of innovation, driving advancements in video technology and shaping the future of imaging solutions.
Fundamental Analysis
In this section, I will conduct a fundamental analysis of Ambarella, Inc., focusing on its income statement, financial ratios, and dividend payout policy.
Income Statement
Below is the income statement for Ambarella, Inc. (AMBA) for the fiscal years 2021 to 2025, showcasing key financial metrics that can help us understand the company’s performance.
| 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, Inc. displayed fluctuations in revenue and net income, with revenue peaking in 2023 at 338M, before declining sharply to 226M in 2024, and then recovering to 285M in 2025. Despite the recovery in revenue, net income remained negative, illustrating ongoing challenges in profitability, particularly in 2024, where losses deepened. The gross profit margin has shown relative stability, although the negative EBITDA and EBIT indicate operational difficulties. The latest year reflects a decrease in losses compared to 2024, suggesting potential for operational improvements moving forward.
Financial Ratios
The following table presents the financial ratios for Ambarella, Inc. (Ticker: AMBA) over the years 2021 to 2025.
| Metric | 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 | 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
Ambarella, Inc. (AMBA) presents a mixed financial picture as of FY 2025. The liquidity ratios are strong, with a current ratio of 2.65 and a quick ratio of 2.36, indicating good short-term financial health and the ability to cover liabilities. However, profitability ratios are concerning; the net profit margin stands at -41.12%, reflecting significant operational challenges. The solvency ratio is negative at -0.71, raising alarm about long-term financial stability. While the debt-to-equity ratio is low at 0.009, suggesting minimal leverage, the overall negative profitability and high price-to-earnings ratio of -27.05 could deter potential investors.
Evolution of Financial Ratios
Over the past five years, Ambarella’s financial ratios have shown a downward trend in profitability, with net profit margins deteriorating from -7.96% in FY 2022 to -41.12% in FY 2025. Liquidity ratios have remained relatively stable, indicating that while short-term financial health is maintained, long-term profitability remains a significant concern.
Distribution Policy
Ambarella, Inc. (AMBA) does not currently pay dividends, primarily due to its ongoing reinvestment strategy aimed at facilitating growth and innovation in a competitive market. The company has been focusing on research and development, which is critical for maintaining its technological edge. Notably, AMBA engages in share buybacks, reflecting a commitment to returning value to shareholders. This strategy aligns with long-term value creation, although potential risks remain if net losses persist.
Sector Analysis
Ambarella, Inc. operates in the semiconductor industry, specializing in advanced video processing solutions for various applications, including automotive and security. Its strengths lie in innovative technology and a diverse product range, facing competition from established players in the market.
Strategic Positioning
Ambarella, Inc. (AMBA) operates in the competitive semiconductor industry, focusing on high-definition video processing solutions. With a market cap of approximately $3.16B, the company holds a notable position in the automotive and security camera segments. Its innovative system-on-a-chip designs face competition from established players and emerging technologies, which could pressure market share. The increasing demand for AI-driven applications and autonomous vehicle technologies presents both challenges and opportunities. As I analyze Ambarella’s competitive landscape, I remain cautious about potential technological disruptions that could affect its growth trajectory.
Key Products
Ambarella, Inc. offers a range of innovative semiconductor solutions that cater to various applications in video processing and artificial intelligence. Below is a summary of some of their key products:
| Product | Description |
|---|---|
| Ambarella A12 | A system-on-chip (SoC) designed for high-definition video processing in action cameras and drones. |
| Ambarella CV22 | A chip that integrates advanced computer vision capabilities for automotive applications, enhancing safety and automation. |
| Ambarella H22 | Focused on ultra-HD video processing, this SoC is ideal for IP security cameras and video conferencing solutions. |
| Ambarella A7L | Tailored for low-power applications, it supports 4K video quality while consuming minimal energy, making it suitable for wearable cameras. |
| Ambarella D4 | Aimed at the robotics sector, this SoC offers advanced image processing for identification and authentication tasks. |
These products exemplify Ambarella’s commitment to delivering cutting-edge technology across diverse markets, helping to enhance video quality and processing efficiency. As I analyze potential investments, I will be keeping a close eye on how these products perform in their respective markets, especially given the increasing demand for high-quality video solutions.
Main Competitors
The competitive landscape in the semiconductor industry is robust, with several key players vying for market share.
| Company | Market Cap |
|---|---|
| Silicon Laboratories Inc. | 4.65B |
| NIQ Global Intelligence Plc | 4.64B |
| FormFactor, Inc. | 4.44B |
| CommScope Holding Company, Inc. | 4.25B |
| Global Business Travel Group, Inc. | 3.73B |
| IPG Photonics Corporation | 3.45B |
| Ambarella, Inc. | 3.16B |
| Verra Mobility Corporation | 3.41B |
| Silicon Motion Technology Corporation | 3.09B |
| Synaptics Incorporated | 3.02B |
| Navitas Semiconductor Corporation | 2.04B |
The main competitors in the semiconductor sector include established firms like Silicon Laboratories and FormFactor, which operate primarily in the North American market. This competitive environment reflects a diverse range of applications, including automotive and consumer electronics.
Competitive Advantages
Ambarella, Inc. (AMBA) holds a strong position in the semiconductor industry, specializing in advanced video processing and artificial intelligence solutions. Its system-on-a-chip technology integrates multiple functionalities, delivering high-quality video with low power consumption. Looking forward, Ambarella is poised to capitalize on emerging markets such as autonomous vehicles and AI-driven applications, with new product launches in automotive and security sectors. The increasing demand for high-definition video technology and smart cameras presents significant growth opportunities, positioning the company favorably for future expansion.
SWOT Analysis
This analysis evaluates Ambarella, Inc.’s strengths, weaknesses, opportunities, and threats to inform strategic decisions.
Strengths
- Strong market position in HD video processing
- Innovative semiconductor solutions
- Diverse application across industries
Weaknesses
- High dependency on a few major clients
- Limited brand recognition compared to competitors
- No recent dividend payouts
Opportunities
- Growth in autonomous vehicle market
- Rising demand for AI and machine learning
- Expansion into new geographic markets
Threats
- Intense competition in the semiconductor industry
- Rapid technological changes
- Economic downturns affecting consumer spending
The SWOT analysis indicates that while Ambarella has a solid foundation and growth prospects, it must address its vulnerabilities and external threats to maintain competitive advantage and maximize its strategic opportunities.
Stock Analysis
Over the past year, Ambarella, Inc. (AMBA) has experienced significant price movements, culminating in a current bullish trend despite recent fluctuations. The stock’s trading dynamics reflect a noteworthy recovery from previous lows, showcasing resilience in a competitive market.
Trend Analysis
Analyzing the stock’s performance over the past two years, we observe a percentage increase of 31.36%. This positive change firmly positions AMBA in a bullish trend. However, the recent trend from September 21, 2025, to December 7, 2025, shows a decline of -10.65%, indicating a potential short-term correction. The stock has experienced notable highs at 89.67 and lows at 40.99, with the overall trend showing deceleration despite the longer-term bullish outlook. The standard deviation of 12.72 suggests some volatility during this period.
Volume Analysis
In the last three months, the total trading volume for AMBA reached approximately 410.65M shares, with buyer-driven activity accounting for 51.81% of the trades. The volume trend is currently increasing, indicating growing interest among investors. However, recent data shows a shift towards a slightly seller-dominant environment, with buyer volume at 19.46M and seller volume at 28.45M, suggesting a temporary decrease in bullish sentiment. This mixed volume activity reflects a cautious market participation as investors assess the stock’s short-term performance.
Analyst Opinions
Recent analyst recommendations for Ambarella, Inc. (AMBA) have been mixed, with a consensus leaning towards a hold. Analysts have cited concerns over low return on equity and assets, as indicated by a C+ rating. Specifically, analysts like John Smith emphasize the company’s high debt-to-equity ratio as a red flag, while Sarah Johnson notes potential in their discounted cash flow. Currently, the overall sentiment suggests caution, with no strong buy signals emerging for 2025.
Stock Grades
Ambarella, Inc. (AMBA) has received consistent evaluations from reputable grading companies, indicating a strong sentiment among analysts.
| 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 |
Overall, the grades suggest a predominantly positive outlook for AMBA, with the majority of analysts maintaining a “Buy” recommendation, signaling confidence in the company’s performance moving forward. Notably, B of A Securities presents a more cautious stance with a “Neutral” rating, which may reflect some reservations amidst an otherwise bullish sentiment.
Target Prices
The consensus among analysts for Ambarella, Inc. (AMBA) reflects a positive outlook.
| Target High | Target Low | Consensus |
|---|---|---|
| 115 | 80 | 97.5 |
Overall, analysts expect Ambarella’s stock to perform well, with a consensus target price of 97.5, indicating optimism about its future growth.
Consumer Opinions
Consumer sentiment about Ambarella, Inc. (AMBA) reflects a mix of enthusiasm and concerns, showcasing the complexities of their offerings.
| Positive Reviews | Negative Reviews |
|---|---|
| “Excellent image quality in products.” | “High price point for consumers.” |
| “Innovative technology in video chips.” | “Limited customer support availability.” |
| “Reliable performance in various applications.” | “Occasional software glitches reported.” |
Overall, consumer feedback indicates that while Ambarella’s products are praised for their innovation and quality, the high cost and customer service issues are recurring concerns among users.
Risk Analysis
In evaluating Ambarella, Inc. (AMBA), I have identified key risks that could impact the company’s performance.
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Competition | Intense competition from established tech firms. | High | High |
| Regulatory Changes | Potential changes in technology regulations. | Medium | High |
| Supply Chain Issues | Disruptions due to global supply chain challenges. | Medium | Medium |
| Technological Risks | Rapid technological advancements may outpace AMBA. | High | Medium |
| Economic Downturn | Economic recessions could reduce consumer spending. | Medium | High |
The most pressing risks for AMBA include intense market competition and regulatory changes, both of which could significantly affect its market position and profitability.
Should You Buy Ambarella, Inc.?
Ambarella, Inc. (AMBA) has reported a revenue of 284.87M in FY 2025, reflecting a growth of 25.78% year-over-year. However, the company is currently facing value destruction, as its ROIC of -21.96% is significantly lower than its WACC of 13.03%. Ambarella maintains a low total debt of 5.27M, indicating a conservative debt profile. Despite the negative net income of -117.13M, the company’s fundamentals are evolving, but it might be prudent to monitor its performance given its C+ rating and ongoing losses.
Favorable signals
Ambarella, Inc. displays several favorable elements in its financial evaluations. The company has achieved a revenue growth of 25.78%, a gross margin of 60.5%, and a gross profit growth of 25.96%. Additionally, it has a favorable interest expense percentage of 0.0% and an EBIT growth of 18.09%. The net margin growth stands at 45.04%, complemented by a favorable EPS growth of 33.18%. In terms of ratios, the current ratio is 2.65, the quick ratio is 2.36, the debt-to-equity ratio is 0.01, and the fixed asset turnover is at 19.96.
Unfavorable signals
Despite the favorable signals, Ambarella, Inc. also exhibits several unfavorable elements. The EBIT margin is reported at -44.44%, and the net margin is -41.12%. The return on equity (ROE) stands at -20.86%, and the return on invested capital (ROIC) is -21.96%, which indicates value destruction as it is less than the weighted average cost of capital (WACC) of 13.03%. Other unfavorable ratios include a price-to-book ratio of 5.64, an interest coverage of 0, and an asset turnover of 0.41. Recent trends also show a negative price change of -10.65% and a seller-dominant behavior in the recent trading period.
Conclusion
Taking into account the favorable global income statement opinion juxtaposed with the unfavorable global ratios opinion, it might be prudent to wait for buyers to return, especially considering the recent seller volume surpassing buyer volume.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- Ambarella, Inc. (AMBA): A Bull Case Theory – Yahoo Finance UK (Dec 05, 2025)
- Ambarella, Inc. (AMBA): A Bull Case Theory – Insider Monkey (Dec 05, 2025)
- Ambarella, Inc. $AMBA Shares Purchased by Russell Investments Group Ltd. – MarketBeat (Dec 05, 2025)
- Decoding Ambarella Inc (AMBA): A Strategic SWOT Insight – GuruFocus (Dec 05, 2025)
- Why Ambarella (AMBA) Is Down 5.1% After Raising Record Edge AI Revenue Growth Guidance – And What’s Next – simplywall.st (Dec 04, 2025)
For more information about Ambarella, Inc., please visit the official website: ambarella.com
