What happened

HD video semiconductor-maker Ambarella (AMBA -1.34%) was off to the races in Wednesday trading, with shares rocketing by 24.2% through 12:55 p.m. EDT after management reported a big earnings beat for its fiscal second quarter -- and forecasting that it would deliver another beat in Q3.

Prior to the report, analysts had forecast that Ambarella would earn $0.25 per share on $75.7 million in sales for the period, which ended July 31. In fact, it earned $0.35 per share, and on sales of $79.3 million.  

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Image source: Getty Images.

So what

The news wasn't all great. The earnings numbers that got investors so excited were actually only "pro forma," and didn't account for items that Ambarella considers one-time in nature. For earnings calculated according to generally accepted accounting principles (GAAP), Ambarella actually lost $0.20 per share for the quarter.  

Nevertheless, that was less than half what the company lost a year ago ($0.43 per share). And sales for its fiscal second quarter jumped 58% year over year, management reported Tuesday evening, with gross profit margins on those revenues inching up by 50 basis points to 62.3%.

Now what

What seems to have gotten investors even more excited, by the way, is that sales are still growing smartly. Ambarella is projecting that in fiscal Q3, its sales will reach somewhere between $88 million and $92 million -- well above analysts' consensus forecast for revenues of less than $79 million. And while Ambarella still isn't promising a profit next quarter, it at least was willing to assure investors that its gross margins will hold fairly steady, in the 61% to 63% range.  

That seemed to be good enough for investors -- and good enough for Wall Street analysts, too. At last count, no fewer than five had raised their price targets on Ambarella stock, with TheFly.com reporting that one investment bank, Craig-Hallum, expects it to rise from its present prices of around $128 to as high as $170 within a year.