AMBA Earnings: Ambarella Surges on Robust Q1 Results

Ambarella (NASDAQ:AMBA) surged in pre-market trading after announcing robust Q1 results. The AI semiconductor company reported an adjusted loss of $0.26 per diluted share in the first quarter compared to a loss of $0.15 per diluted share in the same period last year. This was better than analysts’ expectations of -$0.31 per share.

The company’s revenues declined by 12% year-over-year to $54.5 million but was above consensus estimates of $53.98 million.

Furthermore, Ambarella’s management stated that it had entered into different partnership deals, including an EV passenger vehicle Original Equipment Manufacturer (OEM) for its CV3-AD AI domain controllers and another partnership for its commercial vehicle controllers. It also “gained multiple AI inference wins in the IoT [Internet of Things] market.”

Ambarella’s Guidance for the Second Quarter

In the second quarter, Ambarella expects revenues between $60 million and $64 million, higher than Wall Street estimates of $59.4 million. On an adjusted basis, the gross margin is likely to be between 62.5% and 64.0%.

Needham Analyst Remains Bullish on AMBA

Following the robust Q1 results, five-star-rated Needham analyst Quinn Bolton reiterated a Buy on AMBA stock with a $90 price target. The analyst’s price target implies an upside potential of 86.3% at current levels. Bolton noted that the company’s partnership with the Chinese EV maker is a “win” and could signal faster L2+ adoption rates among Chinese EV players. L2+ is an advanced driver assistance system (ADAS) that provides enhanced autonomous driving technologies.

Is AMBA Stock a Good Buy?

Analysts remain cautiously optimistic about AMBA stock, with a Moderate Buy consensus rating based on five Buys, two Holds, and one Sell. Over the past year, AMBA has declined by more than 30%, and the average AMBA price target of $70.33 implies an upside potential of 45.6% from current levels.