Ambarella: Huge Earnings Beat

Ambarella (NASDAQ:AMBA) is starting to turn around as the revenue declines end. The first quarter is the start of a pickup in the business.

After spiking higher following the report but giving up some gains, investors may want to look for an entry point in Ambarella stock.

Ambarella reported a GAAP EPS of -$0.53 and a non-GAAP EPS of a penny. Revenue fell 17% to $47.2 million. Security camera demand from China had a negative impact on orders. This resulted in recent order delays.

Ambarella forecast revenue of $51-$53 million in the second quarter. Gross margin will come in at 57% - 59%.

Big Opportunity Ahead

Ambarella continues to develop CV (computer vision) and AI solutions. Already, business in professional security cameras, consumer security, and the automotive markets are picking up steam. To take advantage of the lower stock price, Ambarella will buy back $50 million by June 30, 2020. This may limit the magnitude of the stock price drop during such time.

Automotive and security revenue will increase while the other segments will decline. Restrictions in China are a near-term headwind. If trade tension news hurt markets, expect AMBA stock falling, too, though the stock buyback may limit its decline.

Your Takeaway

CV developments are the primary driver for Ambarella’s revenue re-acceleration. The company is on schedule with its readiness so as orders flow in. In that time, markets just might bid the stock higher.