Episode Details

Ambarella, Inc. (AMBA) Q2 FY2027 — It fell roughly 3.4% in after-hours trading after the print, on top of a slide from a 12-month high near $95.51 down into the low sixties. Ambarella's reported net loss narrowed 68% year over year, from $(0.47) to $(0.15) per share. But a one-time $9.0 million credit released from R&D after a cancelled project is worth $0.20 of that improvement - restated, the loss only narrowed 23%. Meanwhile gross margin, the honest read on the actual chip business, fell on both GAAP and non-GAAP bases for a fifth straight year, even as revenue grew 13.2%. THE CALL: HOLD (3/5, MODERATE) — base-case value ~$57 vs ~$61.24 today. KEY METRICS: - Revenue $108.1M, +13.2% YoY; non-GAAP EPS $0.18 beat; GAAP diluted loss $(0.15)/sh - A $9.0M one-time R&D credit (cancelled-project deposit release) is worth $0.20/sh - ex-credit, the loss narrowed 23%, not the reported 68% - GAAP gross margin 57.7% vs 58.9% a year ago; non-GAAP 59.3% vs 60.5% - both down 120bp, fifth straight year of decline - Incremental gross margin on new revenue is only 49%, against a 57.7% company average - Revenue is $0.3M below its level three quarters ago - four quarters effectively flat around $104M/quarter - $272.3M cash + securities, zero debt ($6.15/sh); inventory +47.2% in six months to 153 days of COGS - Street average price target $101.75 (all pre-print) vs our fair value $57 What to watch: adjusted gross margin falling back under 59%, another inventory build without matching revenue growth, or an October revenue print at the low end of guidance Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.