© Reuters. AMBA action: Acceleration of the chipmaker’s momentum after profits
Ambarella (NASDAQ 🙂 is a semiconductor company specializing in low power, high definition and ultra HD video compression.
The company’s focus on AI and HD chips is what makes it popular among its peers. These chips are increasingly used for processing deep neural networks around the world. In addition, age-old catalysts provide strong support via a growing market. This makes AMBA stock an ideal choice for many investors, and I am optimistic about this stock.
Indeed, this AI-driven chipmaker remains a great choice for long-term growth investors. Ambarella has seen impressive growth in recent times, driven by increased demand for AI-based chips.
This was reflected in the recent price movements of this stock. AMBA stock climbed 25% on September 1. It happened after the company released an impressive quarterly report. (See AMBA stock charts on TipRanks)
Let’s see whether or not AMBA stock is an appropriate investment in this environment.
Ambarella’s AI-powered computer vision pays off
As mentioned, Ambarella posted better-than-expected results in the second quarter. In its report, the company said it earned $ 0.35 per share, on revenue of $ 79.3 million in the second quarter. These numbers are well above analysts’ expectations of $ 0.25 per share in earnings, on $ 75.8 million in sales.
However, another factor investors jumped on with this earnings report was the company’s forward-looking projections. Looking ahead to the third quarter, the company expects sales of $ 90 million.
AMBA’s business transformation
Ambarella started out as a manufacturer of video processing chips for action cameras. But over time, the business has grown. The company now describes itself as an AI-vision silicon company.
Currently, many people use Ambarella’s products in computer and human vision applications. These include electronic mirrors, autonomous driving technologies, driving recorders and robotic applications.
Of course, industry-wide challenges still exist. That said, Ambaralla expects FY22 to represent a major inflection point for the company’s business.
Ambarella discovers growth in unexpected areas
The significant shift from traditional video processing to computer vision is still going on. As the company shifts to high-end technologies, investors expect increased margins and increased profitability.
In addition, the growing market share makes Ambarella a stock to watch. The company’s market share is increasing in a number of unexpected markets, including fleet management.
Analysts attribute some of this growth to supply chain constraints. While it is true that Ambarella may just be the right company in the right place at the right time, it is still gobbling up market share. This is a great thing for bullish long-term investors in Ambarella’s core markets.
The Taking of Wall Street
TipRanks analyst rating consensus views AMBA stock as a moderate buy. Out of 12 analyst reviews, there are eight buy recommendations and four keep recommendations.
The average AMBA price target is $ 145.91. This figure ranges between a minimum of $ 115 per share and a maximum of $ 180 per share.
In recent times, growth-conscious investors have increasingly turned to AMBA stocks. Indeed, this is a stock with huge momentum at the moment.
Of course, things could change. This company operates in a growth segment that has been driven by supply chain constraints and increasing demand in the short term. Projecting this for the long term could be dangerous.
However, the catalysts behind the AMBA title appear strong. This is a stock that certainly deserves the attention of growth investors today.
Disclosure: At the time of publication, Chris MacDonald does not have a position in any of the titles mentioned in this article
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