AMBA Should I Buy
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Ambarella Inc (AMBA) is not a strong buy at the moment for a beginner investor with a long-term strategy. While the company shows strong revenue growth driven by Edge AI, its declining net income, EPS, and gross margin, combined with recent post-market price drops and lack of strong trading signals, suggest caution. The stock may be worth monitoring for future entry points, but it does not currently present an optimal buying opportunity.
The MACD is positive and expanding, indicating a bullish trend. However, the RSI is neutral at 72.371, and moving averages are converging, showing no clear momentum. Key support levels are at $64.659 and $62.543, while resistance levels are at $71.508 and $73.624. The stock closed at $61.99, below the first support level, which is a bearish signal.
Hedge funds are significantly increasing their positions in AMBA, with a 169.73% increase in buying over the last quarter.
Ambarella reported a 37.2% revenue growth in fiscal 2026, driven by new product cycles and Edge AI revenue.
Post-market price dropped by -12.57%, indicating negative sentiment or reaction to recent events.
Net income, EPS, and gross margin have all declined YoY in the latest quarter, showing profitability concerns.
Analysts have lowered the price target from $92 to $85, reflecting tempered expectations.
In fiscal 2026/Q3, revenue increased by 31.21% YoY to $108.45 million, driven by strong Edge AI growth. However, net income dropped by -37.24% YoY to -$15.11 million, EPS fell by -39.66% YoY to -$0.35, and gross margin decreased slightly to 59.55%, down -1.65% YoY.
BofA has lowered its price target for AMBA from $92 to $85, maintaining a Neutral rating. Analysts see potential in AI-related growth but expect choppy performance due to scrutiny of AI returns and hyperscaler cash flows.
