Why Artificial Intelligence (AI) Stock Ambarella Was Marching Higher This Week
The news has been very positive with microchip stock Ambarella (NASDAQ: AMBA) over the past few days, and investors have been piling into the artificial intelligence (AI)-focused company. According to data compiled by S&P Global Market Intelligence, as of Friday before market open Ambarella's share price was up a mighty 19% week to date. Solid quarterly results, a series of analyst price target raises, and the decline of a peer stock helped Ambarella defy gravity.
Double beat for the second quarter
Ambarella's quarterly earnings report was -- at least in the Monday-Thursday stretch -- the major market-shaking piece of news for the company. That report revealed Ambarella booked sales of almost $64 million in its second quarter of fiscal 2025, ended July 31, only 3% higher year-over-year but comfortably above the average analyst estimate. There was improvement on the bottom line too, with non-GAAP (adjusted) net loss narrowing to $5.5 million ($0.13 per share) from the year-ago deficit of $6 million.
On average, analysts tracking Ambarella stock were estimating the company's revenue would be just over $62 million, accompanied by a per-share adjusted net loss of $0.19.
Investors liked the double beat, not to mention the third-quarter revenue guidance that also topped expectations. So did more than a few analysts. A clutch of them wasted little time in raising their price targets on Ambarella shares.
AI stock bargain hunting?
Ambarella's latest earnings release came a mere one day before that of a larger and more prominent hardware company closely identified with AI, Nvidia. Although Nvidia also reported a good quarter, expectations for that stock were far more ambitious, and since reporting earnings it has traded down. Investors spooked with that company's relatively high price and valuations might be seeking well-performing alternatives that are not as expensive.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
