Ambarella: Limited Momentum For Automotive And IoT Demand – Initiating With A Hold

Summary:

  • Ambarella Inc. reported in-line Q4 results and outlook for 1QFY25. I expect this in-line trend to continue in 1HFY25.
  • I think the company is too exposed to IoT and automotive markets to be able to outperform given the current correction cycle.
  • The stock has underperformed the S&P 500 and lacks potential upside in the first half of FY25, in my opinion.
  • Ambarella’s Asia exposure, particularly in China, may weigh further on its top-line growth, but this worst-case scenario is unlikely.
  • I share my thoughts on Ambarella here, and why I think it’ll be in-line performer in 2024.

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Investment Thesis

Ambarella, Inc. (NASDAQ:AMBA) reported its fourth quarter of FY2024 results and outlook for FY25 in late February, confirming what I believe will be a lackluster first half of FY2025. Ambarella is a relatively


Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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