AI Revenue To Bolster Ambarella's Growth By 60% In 2024, 3 Analysts On Q1 Print

Shares of Ambarella Inc (NASDAQ: AMBA) tanked in early trading on Wednesday, despite the company reporting upbeat earnings for its fiscal first quarter. Investors grew concerned on the company’s weak second-quarter forecast.

The report came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

• Susquehanna analyst Christopher Rolland maintained a Positive rating and price target of $85.
• Needham analyst Quinn Bolton reiterated a Buy rating and price target of $100.
• Oppenheimer analyst Martin Yang reaffirmed a Perform rating on the stock.

Susquehanna

The inventory overhang “continues to weigh” on Ambarella’s performance, which resulted in a worse-than-expected guidance for the second quarter, Rolland said.

“Once again, like so many others, Ambarella sees a customer inventory build for IoT and some Auto, as they now forecast another quarter of burn, thus guiding 2Q flat across both Auto and IoT,” the analyst wrote. However, there is “little visibility into the end of the channel inventory overhang."

Needham

Management’s guidance for the second quarter of fiscal 2024 is impacted by continued inventory corrections, primarily in IoT, Bolton said. “Auto & IoT were guided to be flat Q/Q (signaling the correction isn't worsening), but order rates have yet to provide visibility into a recovery,” he added.

The company represents a “near-term AI-driven buying opportunity,” with AI-related revenues expected to be around 60% in fiscal 2024, the analyst stated.

Oppenheimer

Although the company issued weak guidance, it exhibited “impressive progress with its CV family of chips,” Yang wrote in a note.

“The company secured its first design win for L4 (jointly developed with Continental) with a commercial vehicle customer,” he added.

AMBA Price Action: Shares of Ambarella had risen by 12.58% to $71.65 at the time of publishing Wednesday.