Ambarella (NASDAQ: AMBA) stock soared 20% on Friday after the semiconductor company delivered second-quarter earnings that topped Wall Street expectations and issued guidance well ahead of analyst forecasts.
The results underscored growing demand for the company’s edge artificial intelligence (AI) solutions, boosting investor sentiment.
Earnings beat estimates
For the quarter, Ambarella reported adjusted earnings of 15 cents per share, handily surpassing the 5 cents per share projected by LSEG consensus estimates.
Revenue also came in above expectations, at $96 million versus the $90 million anticipated.
Despite the adjusted profit, the company posted a net loss of $20 million, or 47 cents per share, reflecting costs tied to stock-based compensation and the amortisation of acquisition-related expenses.
That marked an improvement from the year-ago quarter, when Ambarella recorded a net loss of $35 million, or 85 cents per share.
The results highlight the company’s ongoing effort to balance significant investment in research and development with the growing commercial potential of its technology.
In the session, the stock hit its 52-week high of $93.44. The stock lost some of its gains and was trading at $82.12 at the time of writing.
Strong guidance and growth outlook
Looking ahead, Ambarella projected third-quarter revenue between $100 million and $108 million, far exceeding LSEG’s estimate of $91 million.
The company also raised its full fiscal year revenue growth outlook to a range of 31% to 35%.
At the midpoint, that equates to $379 million, comfortably above the $350 million expected by analysts.
“After a multi-year period of significant edge AI R&D investment, our broad product portfolio enable us to address a rising breadth of edge AI applications,” CEO Fermi Wang said on a call with analysts.
He pointed to portable video, robotic aerial drones, and edge infrastructure as particular areas of strength.
Edge computing, in which data is processed locally on devices rather than in distant cloud servers, continues to gain traction across industries seeking greater efficiency, speed, and security.
Ambarella’s system-on-chip semiconductors and AI software are positioned at the core of this trend.
Investor reaction and strategic context
The upbeat results and outlook propelled Ambarella’s stock sharply higher, adding to gains seen earlier this year when Bloomberg reported in June that the company was exploring a potential sale and had engaged in talks with banks.
The latest rally reflects both confidence in Ambarella’s near-term prospects and optimism about longer-term opportunities in edge AI markets.
While the company remains unprofitable on a net basis, narrowing losses and stronger revenue growth are seen as encouraging signs by investors.
The focus will likely remain on execution and the pace at which Ambarella can translate its research investments into sustained profitability.
With demand accelerating for edge computing solutions, Ambarella’s ability to expand its product adoption across video, drone, and infrastructure markets could determine whether its latest momentum extends through the remainder of the year.
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