Ambarella (AMBA 1.06%) stock is surging in Wednesday's trading. The imaging company's share price was up 10.3% as of 1:15 p.m. ET, according to data from S&P Global Market Intelligence.
NASDAQ: AMBA
Key Data Points
After the market closed yesterday, Ambarella published results for the second quarter of its current fiscal year (which ended July 31). The company delivered sales, earnings, and forward guidance that beat the market's expectations, and investors are buying up the stock today.
Ambarella beats expectations and shows AI momentum
Ambarella reported a loss of $0.13 per share on sales of $63.7 million in fiscal Q2, beating the average analyst estimate's call for a per-share loss of $0.19 on sales of $62.1 million in the quarter. Revenue for the company's edge artificial intelligence (AI) products hit a new high in the period, and management expects that momentum in the category will help the business deliver double-digit sales growth on a sequential quarterly basis in Q3. The company thinks its new products will lay the foundation for the business to branch its computer vision into more advanced AI networks and take advantage of trends including generative artificial intelligence.
For the third quarter, Ambarella is guiding for sales to come in between $77 million and $81 million. If the company were to hit the midpoint of that range, it would mean delivering 56% growth over the $50.6 million in sales it posted in last year's quarter. Management also expects that the business will deliver a non-GAAP (adjusted) gross margin between 62.5% and 64%, and it's forecasting adjusted operating expenses between $49 million and $51 million.
Wall Street is getting more bullish on Ambarella stock
On the heels of the better-than-expected Q2 results, Ambarella stock has received a surge in positive coverage from analysts. For example, Morgan Stanley raised its price target from $67 per share to $73 per share and maintained an overweight rating on the stock. Meanwhile, TD Cowen raised its target from $65 per share to $75 per share. Stifel was even more bullish, reiterating a buy rating on Ambarella and raising its price target on the stock from $75 per share to $80 per share. Bank of America and Craig-Hollum also increased their valuation targets on the company.
