What's Going On With Ambarella Shares Wednesday?

Ambarella, Inc. (NASDAQ:AMBA) shares are trading lower Wednesday on the heels of the company’s third-quarter financial results.

• AMBA is encountering selling pressure. See the full story here.

What To Know: The company reported adjusted earnings per share of 27 cents, beating the consensus estimate of 21 cents. In addition, Ambarella reported revenue of $108.50 million, beating the consensus estimate of $104.12 million.

The quarter showed continued improvement in profitability. Non-GAAP net income rose to $11.9 million, up from $4.6 million in the same period last year, while GAAP net loss narrowed to $15.1 million from $24.1 million a year ago. Non-GAAP gross margin came in at 60.9%, compared with 62.6% last year.

Ambarella ended the period with $295.3 million in cash, cash equivalents and marketable debt securities, up from both the prior quarter and the same period last year. Management highlighted record quarterly performance driven by ongoing growth in edge AI revenue and noted year-to-date free cash flow at 14.8% of revenue.

Q4 Outlook: Ambarella estimates revenue of between $97 million and $103 million, versus the consensus estimate of $94.10 million.

Analyst Changes: Following the earnings report, multiple analysts issued price target adjustments.

• Stifel analyst Tore Svanberg reiterated a Buy rating on Ambarella and raised the price target from $90 to $100.
• Rosenblatt analyst Kevin Cassidy maintained a Buy rating on Ambarella and raised the price target from $100 to $115.

It’s not clear what’s moving Ambarella shares, given the solid third-quarter report and positive analyst updates in response. It’s possible investors are engaging in profit-taking following a sharp rise in the stock in recent months. Even with Wednesday’s sell-off, shares are still up more than 21% over the past six months.

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AMBA Price Action: At the time of writing, Ambarella shares are trading 15.61% lower at $76.77, according to data from Benzinga Pro.

This illustration was generated using artificial intelligence via Midjourney.