Ambarella (AMBA) Stock Forecast & Price Target

Ambarella Inc is exhibiting significant growth in revenue driven by an approximately 20% year-over-year increase in the average selling prices (ASPs) of its system-on-chip (SoC) solutions, alongside strong demand in Edge AI applications. The company recently reported record revenue of $108.5 million for F3Q26, representing a notable 31.2% year-over-year increase, which exceeded expectations and was largely supported by automotive and IoT revenues experiencing growth in low-single digits and mid-teens, respectively. Furthermore, Ambarella's expanding portfolio, particularly with its CV2 product family, is poised to drive substantial future revenue, reflecting a positive outlook for sustained performance across key markets.

Ambarella Inc. has reported a decline in its revenue outlook for the upcoming quarter, with guidance suggesting an 8% quarter-over-quarter decrease, attributed to typical seasonality and expected declines in Automotive and IoT segments by mid-to-high single digits. The company’s gross margin for the fourth quarter is forecasted to be lower than previous estimates, projected at 59.8% due to a shift towards higher volume customers that may necessitate discounts, which could potentially affect overall profitability. While edge AI revenue remains strong, representing approximately 80% of quarterly revenue, the overall financial outlook remains cautious, driven by anticipated declines in key segments and lower profit margins.