Ambarella (NASDAQ: AMBA) shares plummeted 7.73% in pre-market trading on Friday, following the company's first-quarter earnings report and forward guidance. Despite beating revenue estimates, investors appeared concerned about the company's net loss and cautious outlook regarding geopolitical uncertainties.
The edge AI market leader reported Q1 revenue of $85.872 million, surpassing the IBES estimate of $83.7 million. However, the company posted a net loss of $24.328 million for the quarter. Ambarella's CEO, Fermi Wang, highlighted the company's fourth consecutive quarter of record AI revenue but also emphasized the consideration of an "uncertain geopolitical environment" in their guidance.
While Ambarella raised its fiscal 2026 revenue growth guidance to a range of 19% to 25%, translating to approximately $348 million at the mid-point, the broader guidance range reflects caution. Analysts have mixed reactions to the results, with some maintaining hold ratings while others reaffirm buy ratings. Rosenblatt Securities analyst Kevin Cassidy maintained a Buy rating and raised the price target to $95, while Bank of America Securities analyst Vivek Arya reiterated a Hold rating but increased the price target. The divergent analyst views underscore the complex landscape Ambarella faces as it navigates growth opportunities in AI while managing operational and competitive challenges.
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