Ambarella, Inc. (AMBA): A Bull Case Theory

We came across a bullish thesis on Ambarella, Inc. on X.com by @TheValueist. In this article, we will summarize the bulls’ thesis on AMBA. Ambarella, Inc.'s share was trading at $63.64 as of February 6th. AMBA’s forward P/E was 106.38 according to Yahoo Finance.

Ambarella, Inc. is a fabless semiconductor company focused on low-power, high-performance edge AI systems-on-chip that integrate video processing, image signal processing, and on-device AI inference into a single, highly optimized platform. Following a prolonged post-pandemic digestion phase, the company is now entering a clear growth re-acceleration, with fiscal Q3 2026 revenue reaching $108.5 million, up 31% year over year, alongside strong 60.9% non-GAAP gross margins and a return to non-GAAP profitability.

Management raised full-year fiscal 2026 revenue guidance to 36–38% growth, positioning Ambarella to achieve a record revenue year, supported by both unit growth and rising average selling prices as higher-value AI SoCs become a larger mix of sales.

Ambarella’s core differentiation lies in its performance-per-watt advantage and its tightly integrated “video plus AI plus low power” architecture, which is well suited for power- and thermally constrained edge deployments across enterprise security, consumer devices, drones, robotics, and emerging edge infrastructure appliances. The company is also deepening its software moat through the Cooper Developer Platform, aimed at reducing deployment friction and enabling customers to transition away from GPU-centric solutions by offering lower total cost of ownership at the edge.

Strategically, Ambarella is expanding beyond traditional camera endpoints into higher-ASP opportunities such as edge infrastructure aggregation devices, advanced drones, and AI-enabled automotive telematics, while maintaining enterprise security as a stable demand anchor. Although customer concentration and consumer cyclicality remain risks, the company’s strong cash position, improving operating leverage, and expanding AI workloads create an attractive upside profile. If execution continues and edge AI adoption broadens, Ambarella is well positioned for sustained multi-year growth and valuation support.

Previously, we covered a bullish thesis on Monolithic Power Systems, Inc. (MPWR) by Hidden Market Gems in April 2025, which highlighted the company’s fabless operations, strong margins, diversified customer base, and AI exposure. MPWR’s stock price has appreciated by approximately 118.89% since our coverage. @TheValueist shares a similar thesis but emphasizes Ambarella, Inc.’s edge AI growth acceleration, performance-per-watt advantage, and expanding software moat.

Ambarella, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held AMBA at the end of the third quarter which was 38 in the previous quarter. While we acknowledge the risk and potential of AMBA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMBA and that has 10,000% upside potential, check out our report about this cheapest AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.  Follow Insider Monkey on Google News.