For fans of Ambarella (NASDAQ:AMBA), there's still no escaping its ties with the downward-spiraling GoPro (NASDAQ:GPRO). But that is slowly changing. GoPro's recent drone recall, ahead of the all-important holiday shopping season, drove its stock price down 26% over the past month. Unlike in days of old, though, Ambarella shares didn't follow in lockstep with GoPro, rising 3% during the same period.

Like Ambarella, Intel (NASDAQ:INTC) is in the midst of a transition. Intel's business transformation is different than expanding its customer base to avoid an overreliance on a single revenue source. For Intel, PCs are no longer the end-all, cure-all, and it missed the smartphone train. But with a commercial drone of its own nearly ready for delivery, expansion of its wearable-solution product suite, and a focus on the Internet of Things (IoT) firmly in place, Intel is reinventing itself.

That's a lot of change for both Ambarella and Intel. So which is the better buy for long-term investors?

Image source: Ambarella.

The case for Ambarella

It's been estimated by pundits that Ambarella "only" generates about a third of its revenue from GoPro. While still significant, that's down from last year, when Ambarella generated half its sales from that one source.

Despite GoPro's hiccup, Ambarella isn't backing away from the opportunity the drone market represents. One estimate suggests that drones, primarily commercial ones, will generate as much as $127 billion in sales by 2020. As one of the early adopters, Ambarella could find its video processors driving a return to topline growth, reversing its current downward trend.

At first glance, Ambarella's fiscal second-quarter 2017 revenue decline of 22.6% to $65.1 million, and its 14% jump in total expenses, don't seem to add up. That sort of revenue decline is usually accompanied by lower overhead. But in Ambarella's case much of the spending went to increasing its research and development efforts, a necessity as it moves forward.

Ambarella deserves a near-term "pass" on its expenses because of its forays into burgeoning markets such as automotive (particularly video and audio infotainment systems), wearables, and "smart" home security cameras. With third-quarter results scheduled for Dec. 1, investors won't have to wait long to check the status of Ambarella's early-stage transition efforts.

Image source: Intel.

The case for Intel

As demonstrated by its recently released Kaby Lake Core i7 computer processing unit (CPU), Intel hasn't by any means exited the PC business entirely. Odd as it may sound, given the dire quarterly PC numbers of late, one of Intel's customers -- HP Inc. (NYSE:HPQ) -- actually increased both its units shipped and its market share last quarter.

HP's surprisingly strong PC sales likely played a role in Intel's client computing unit increasing sales 5% year over year, to $8.9 billion last quarter. Improved PC revenue was a pleasant surprise, but Intel CEO Brian Krzanich knows his company's future lies in cloud-based data centers, IoT (and the artificial intelligence capabilities that requires), and wearables, along with drones.

Intel's drone strategy is focused -- as it should be -- on niche commercial markets, as it demonstrated recently with its multidrone light show at the Happiest Place on Earth. The recently unveiled Falcon 8+ commercial drone is another example of Intel's go-to-market strategy. Selling toy drones to consumers during the holidays is nice, but that's not where the majority of revenue is -- and Intel recognizes that.

In addition to the 10% jump in revenue to $4.5 billion last quarter from the data center group -- easily Intel's second largest division -- IoT sales climbed a whopping 19% in the third quarter to $689 million.

The better buy

So, which is the better buy, Ambarella or Intel? Both are sound long-term investment alternatives, but Intel gets the nod: It's a bit further along in its transition, and it provides a 3% dividend yield.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.