What happened
Shares of Ambarella (AMBA 0.49%) were climbing Tuesday after an analyst boosted his price target for the semiconductor company. As of 1:28 p.m. ET, the stock was up by 13.7%.
So what
Stifel analyst Tore Svanberg raised his price target on Ambarella's stock from $200 to $215 and kept his buy rating on it. Svanberg believes that Intel's recent announcement that it's spinning off its advanced driver assistance system (ADAS) unit, Mobileye, as a public company, is good news for Ambarella's automotive segment.
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There are some overlaps between Ambarella and Mobileye in the automotive chip space, and it appears that the analyst thinks this Mobileye news could cause investors to reassess the value of Ambarella's business.
Intel purchased Mobileye back in 2017 for $15.3 billion. The Wall Street Journal is reporting that Intel could value Mobileye at around $50 billion when it returns it to the public markets -- a hefty valuation that could spur investors to pay even more attention to the automotive chip market. Intel says it will hold onto a majority stake in Mobileye, and that the two will remain strategic partners.
As automakers continue to add advanced driver assistance features to vehicles, the ADAS market could grow to an estimated size of $32 billion annually by 2023.
Now what
Ambarella's share price gains Tuesday came on the heels of a 10% jump last week. On Nov. 30, the company announced results for its fiscal 2022 third quarter. For the period, which ended Oct. 31, its revenue jumped 64% year over year.
Investors have been particularly excited about Ambarella's chip opportunities and have pushed its share price up by 132% over the past 12 months. Given its strong quarterly results and Svanberg's price target hike, it's no surprise that this tech stock is performing so well.
