What happened

Ambarella (AMBA 0.58%) investors trailed a rapidly declining market this week. The video tech specialist's shares dove 23% through Thursday trading, according to data provided by S&P Global Market Intelligence, even as the wider market fell 2.2%. Ambarella's stock is now down nearly 70% so far in 2022.

The decline was sparked by an operating update from the management team that described demand challenges that are likely to persist through the next few quarters.

So what

Ambarella said in a Tuesday earnings announcement that sales for the Q2 period that ended in July were up just 2% to $81 million. While that result matched most investors' expectations, it included several warning signs about the rest of the fiscal year ahead.

Some of Ambarella's customers are delaying purchasing commitments in an effort to keep inventories low. Demand is weaker in a few semiconductor niches, too, following sharp spikes in earlier phases of the pandemic. These factors combined to darken the short-term outlook, as sales are now expected to be flat in the fiscal third quarter.

Now what

It can be jarring to see a growth company project flat or declining figures, but investors should try to tune out short-term sales fluctuations while focusing on the bigger picture. Ambarella's relatively small sales footprint means it can see big revenue swings from quarter to quarter. Its wider growth ambitions rely on its computer-vision platform, and a new generation of these chips is making its way to potential customers right now.

Ambarella is encouraged by the early acceptance of the tech, which might find its way into many autonomous driving solutions. The chips deliver high performance at low power consumption, making them competitive against some higher-priced rivals.

The stock might remain pressured until sales growth accelerates again, and that rebound depends partly on things outside of Ambarella's control like the wider economic climate. But in the meantime, the company is doing what it can to extend its tech innovation lead in the attractive computing-vision space.