This semiconductor stock jumped 18% after beating analyst expectations


One of the biggest winners in the market was a surprising semiconductor stock. Ambarella (NASDAQ: AMBA), a maker of image processing SoCs (system on chips), saw its shares surge after it announced their fiscal second-quarter financial results.

Revenues were reported at $56.4 million, still down 9.7 percent from the $62.5 million reported the same time last year but still beat analyst estimates by over $4 million. Other financial metrics such as gross margin as well as GAAP net income weren’t particularly spectacular as well, with both figures falling but remaining strong in comparison to what Wall Street was expecting.

However, what truly impressed the markets was the exceptionally strong sales of its SoCs to a major action camera producer, GoPro (NASDAQ: GPRO). However, Ambarella is now also moving to sell computer vision chips and SoCs to other markets as well.

“Our confidence in our fiscal year 2020 outlook has increased, despite the geopolitical uncertainty,” said Fermi Wang, President and CEO, in an official statement.  “Most importantly, we continue to demonstrate strong progress on our strategy to transform from a pure video processing company to an artificial intelligence (“AI”) video company.

During the second quarter, we commenced mass production CV system-on-a-chip (“SoC”) shipments into the automotive market and CV25 became our second CV SoC to generate mass production revenue.  We continue to have strong confidence in the three waves of CV revenue we have previously described.”

What’s even better is that Ambarella expects that this momentum will continue to grow, with revenues for the next quarter reaching $63 million to $67 million. This would be the equivalent of a 12% to 19% sequential growth rate. The company also attributes this spike in growth to due strong sales of its security camera SoCs in countries like China. This more than offset declines in other business segments, such as the automotive sector as well as in areas like drones and other consumer-based devices.

The only potential problem for the company going forward is that its likely to draw further competition from rivals. Among the biggest of its rivals are companies like Intel (NASDAQ: INTC), which is also eyeing the same market as Ambarella in the future.

Shares of Ambarella jumped by 17.9 percent before the weekend and are likely to increase a little bit more on Tuesday. Over the course of the past six months, shares have gone up and down but have stayed within the $40 to $50 price range. Taking into account this recent price swing, shares of Ambarella are currently trading near $56 per share, hitting a new 52-week high for the company in the process.

Ambarella Company Profile

Ambarella Inc is a developer of semiconductor processing solutions for high-definition video capture, sharing, and display. The firm’s solutions are sold to original design manufacturers and original equipment manufacturers to be designed for use in infrastructure broadcast encoders, wearable device cameras, automotive cameras, and security cameras.

Ambarella’s system-on-a-chip designs, based on its proprietary technology platform, are highly configurable to applications in various end markets. The firm derives majority of revenue from Taiwan. – Warrior Trading News