Why Artificial Intelligence (AI) Ambarella Shares Soared This Week

The news was very positive with the microchip stock Ambarella (AMB 1.51%) in recent days, and investors have flocked to the company focused on artificial intelligence (AI). Ambarella’s share price is up 19% year to date, according to data compiled by S&P Global Market Intelligence, as of Friday before the market opened. Solid quarterly results, a series of analyst price target increases and a decline in a peer stock helped Ambarella defy gravity.

Double beat for the second quarter

Ambarella’s quarterly earnings report was — at least from Monday through Thursday — the biggest market-shattering news for the company. The report showed Ambarella posted sales of nearly $64 million in the second quarter of fiscal 2025, which ended July 31, up just 3 percent year-over-year but well above the average analyst estimate. There were also improvements on the bottom line, with non-GAAP (adjusted) net loss narrowing to $5.5 million ($0.13 per share) from a loss of $6 million a year ago.

On average, analysts who follow Ambarella’s stock were expecting the company’s revenue to be just over $62 million, accompanied by an adjusted net loss per share of $0.19.

Investors loved the double whammy, not to mention third-quarter earnings guidance that beat expectations. So did more than a few analysts. Several of them wasted little time in raising their price targets on Ambarella shares.

AI bargain hunting?

Ambarella’s latest earnings release came just a day before that of a larger and more prominent hardware company closely identified with AI. Nvidia. Although Nvidia also reported a good quarter, expectations for that stock were much more ambitious, and it has traded lower since reporting earnings. Investors spooked by that company’s relatively high price and valuations might look for performing alternatives that aren’t as expensive.