GoPro Inc (NASDAQ:GPRO) revealed investors had a reason to be worried after yesterday’s third-quarter report demonstrated supply constraints lead to an underperformance. Meanwhile, considering GoPro has been a key client to Ambarella Inc (NASDAQ:AMBA), the action camera giant’s results have been intertwined with investor sentiment toward the chip maker’s shares. Why do Wedbush and Canaccord remain bullish on GPRO and AMBA despite these concerns?

Let’s delve deeper:

GoPro Inc

GoPro shares are crashing close to 11% today after proving supply concerns legitimate and posting third-quarter results yesterday, November 3rd, that fell short of expectations. Furthermore, the giant pulled back on top-line guidance for the financial year of 2016.

Taking into account a more sluggish than anticipated supply ramp for the Hero 5S cameras and the Karma drone and expected profitability to come back not until next year, Wedbush analyst Nick McKay still reiterates an Outperform rating on shares of GPRO but finds it “warranted” to pull back on the price target from $17.50 to $12.

For the third quarter, GPRO brought in revenue of $241 million and EPS of $(0.60), falling under the Street’s estimates of $319 million and $(0.35). Revenue guidance for the year of 2016 was cut from a range of $1,350 to $1,500 million down to $1,250 to $1,300 million. The analyst believes the weak quarterly performance and outlook reduction are reflections of problems with production that caused supply constrains with the Hero 5 Black cameras and Karma drones.

McKay asserts, “We believe that the new HERO5 cameras and Karma drone have compelling feature sets and superior branding that should make them popular with an increasing number of consumers as supply constraints ease. Despite execution missteps, we are unwilling to give up on GoPro shares until we get better clarity into the sustainability of sales once the HERO5s and Karma have fully ramped.”

However, the analyst does see a silver lining to the situation and adds, “On a more positive note, demand for the new products appears to be brisk, with limited supply the main issue.”

“Although the high level guidance provided for 2017 was not overly impressive (double-digit percentage top-line growth with a return to profitability), we see it as a reflection of management’s faith in demand for its products,” McKay surmises.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Nick McKay is ranked #3,945 out of 4,164 analysts. McKay has a 10% success rate and confronts a 31.1% loss in his annual returns. When suggesting GPRO, McKay forfeits 35.5% in average profits on the stock.

TipRanks analytics exhibit GPRO as a Hold. Out of 12 analysts polled by TipRanks, 3 are bullish on GoPro stock, 7 remain sidelined, while 2 are bearish on the stock. With a return potential of nearly 10%, the stock’s consensus target price stands at $13.00.screen-shot-11-04-16-at-06-49-pm

Ambarella Inc

Ambarella shares are trading “sharply lower” in the past month as investors have feared GoPro would possibly let them down with weak holiday sales guidance- concerns that have now become a reality after GoPro released its quarterly print yesterday.

Acknowledging noted headwinds emerging from GoPro as well as Sony, Canaccord analyst Matt Ramsay  understands “some investors may be disappointed” with GoPro’s disappointing results and outlook that “likely remove some upside potential from Ambarella’s near-term results.”

Nonetheless, the analyst has faith in “the company’s strategy and technology roadmaps” and reiterates a Buy rating on shares of AMBA with a price target of $87, which represents a 48% increase from where the shares last closed.

The analyst explains, “While an important customer, we believe GoPro continues to become less important to Ambarella’s future both financially and particularly strategically.”

“Our long-term conviction regarding Ambarella’s leading technology position in several growing end markets including wearable, security, automotive, and drone cameras remains intact, and we believe investors will be rewarded as new design wins ramp, the launch of new 14nm chipsets next year return the company to solid Y/Y sales/earnings growth, and from the entry into much larger and stable end markets as the computer vision chipset roadmap launches exiting C2017 […] With Ambarella shares pulling back to very attractive valuation levels (even fully excluding GoPro contributions), we believe long-term investors will be well served BUYing the weakness,” Ramsay concludes.

For reference, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Matt Ramsay is ranked #192 out of 4,164 analysts. Ramsay has a 57% success rate and realizes 8.6% in his yearly returns. However, when recommending AMBA, Ramsay loses 12.6% in average profits on the stock.

TipRanks analytics indicate AMBA as a Buy. Based on 11 analysts polled by TipRanks in the last 3 months, 8 rate a Buy on AMBA, while 3 maintain a Hold. The 12-month price target stands at $80.33, marking a nearly 38% upside from where the stock is currently trading.screen-shot-11-04-16-at-06-55-pm