Ambarella Pops 8% On Upbeat Outlook, 4Q Earnings Beat

Ambarella stock gained 8.2% in Tuesday’s extended trading session after the semiconductor design company reported better-than-expected 4Q results and forecasted 1Q revenue that topped the Street’s estimates.

Ambarella’s (AMBA) adjusted earnings of $0.14 per share outperformed analysts’ estimates of $0.08 per share. However, the bottom-line result remained flat on a year-over-year basis.

4Q revenues increased 9% to $62.1 million and exceeded consensus estimates of $57.7 million. The company’s quarterly results benefited from accelerated demand for its artificial intelligence (AI)-based vision silicon products.

As for 1Q, Ambarella expects to generate revenues in the range of $67-$70 million, much higher than analysts’ expectations of $56.2 million. (See Ambarella stock analysis on TipRanks)

Following the earnings release, Rosenblatt Securities analyst Kevin Cassidy raised the stock’s price target to $140 (23% upside potential) from $115 and reiterated a Buy rating.

In a note to investors, Cassidy wrote, “Ambarella delivered a solid beat-n-raise as designs won a year or more ago are ramping into production. A 2nd and 3rd wave of new design-driven revenue is expected through FY24. We view Ambarella as a leader in the AI revolution happening across multiple markets/products.”

Overall, the Street has a bullish outlook on the stock, with a Strong Buy consensus rating based on 5 Buys and 1 Hold. The average analyst price target of $121.33 implies upside potential of about 7% to current levels. Shares have gained about 91% over the past year.

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