AMBA · Ambarella
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $71.24
Note written ·
Price against the kill line
15.6% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $71.24, on record since 11 November 2026. The shares are down 23.5% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $71.24, which would put the shares well above both the 50-day and 200-day moving averages and show them leading the S&P 500. Third-quarter revenue above the $124.0 million top of the guide, or a signed sale agreement, would also show the shares leading.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Technology
Quarter to 31 July 2026, filed 4 September 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 108
- Revenue, change on a year (%)
- +13.2
- Gross margin (%)
- 57.7
- Operating margin (%)
- −7.5
- Free cash flow, four quarters ($M)
- 9.7
- Net cash, cash less debt ($M)
- 272
- Enterprise value to sales (×)
- 5.7
- Free-cash-flow yield (%)
- 0.4
All filed numbers
What Ambarella reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 108 | +13.2 | 57.7 | −7.5 |
| first filed | 100 | +16.9 | 58.4 | −19.3 |
| first filed | 101 | +20.1 | 58.4 | −18.3 |
| first filed | 109 | +31.2 | 59.6 | −15.0 |
| first filed | 95.5 | +49.9 | 58.9 | −23.0 |
| first filed | 85.9 | +57.6 | 60.0 | −30.1 |
| Pre-tax income ($M) | −6.3 |
| Net income ($M) four quarters: −56.3 | −6.7 |
| Diluted shares, change on a year (%) against the quarter to 31 July 2025 | +3.4 |
| Operating cash flow ($M) | 27.3 |
| Capital spending ($M) | 17.6 |
| Free cash flow ($M) | 9.7 |
| Cash and short-term investments ($M) | 272 |
| Debt ($M) | None reported |
| Net cash, cash less debt ($M) no debt reported | 272 |
| Deferred revenue ($M) +7.1% on a year | 20.9 |
| Backlog, orders not yet delivered ($M) +133.2% on a year | 91.4 |
| Receivables ($M) | 37.4 |
| Inventory ($M) | 76.9 |
| Shareholders' equity ($M) | 620 |
| Market value ($M) | 2,654 |
| Enterprise value, market value plus net debt ($M) no debt reported | 2,381 |
| Enterprise value to sales (×) no debt reported | 5.7 |
| Enterprise value to operating income (×) | Not meaningful |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 4.3 |
| Free-cash-flow yield (%) | 0.4 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 10.7% of shares outstanding sold short, 4.3 days of average trading to cover, −8.4% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $1.1M |
| 12 monthsfrom | $0 | $16.6M |
The thesis
Ambarella's shares are more likely to lag the S&P 500 over the next three months. They closed at $61.06 on 12 November 2026, below both the 50-day average of $65.02 and the 200-day average of $67.17, even though a report dated 30 October 2026 said the company entered exclusive, non-binding sale talks with NXP Semiconductors. The third-quarter fiscal 2027 report, due on 24 November 2026 after the market close, settles whether revenue supports the price without a deal.
The company announced the date on 5 November 2026: the earnings call is at 1:30 p.m. Pacific Time on 24 November 2026. Third-quarter guidance is revenue of $115.0–124.0 million and a non-GAAP gross margin of 59.0–60.0% (GAAP is generally accepted accounting principles).
The takeover story is the main driver of the price, and no company has confirmed it. The Financial Times reported on 31 July 2026 that NXP was in talks to buy Ambarella, then valued at about $3.3 billion. A summary dated 30 October 2026, without a named original outlet, said the board weighed several offers, including reported interest from Qualcomm and NVIDIA, and chose NXP. It disclosed no price.
The shares have a takeover premium. The three-month price change is −25.6% from the $82.04 close of 14 August 2026. The last close is 36.8% below the 52-week intraday high of $96.69 set on 12 November 2025.
Bullish and bearish views on Ambarella, Inc.
The bull case on Ambarella, Inc. (AMBA), in brief: takeover interest keeps resurfacing. The bear case: no deal has been confirmed.
Bull case
- Takeover interest keeps resurfacing. The Financial Times reported NXP talks on 31 July 2026. The 30 October 2026 summary described exclusive talks after competing interest, though neither company has confirmed it.
- Revenue is growing. Second-quarter fiscal 2027 revenue was $108.1 million, up 13.2% from a year earlier and 7.7% from the previous quarter, above the $107.753 million consensus. Non-GAAP earnings per share were $0.18 against $0.17 expected (company release, 3 September 2026).
- Guidance points up. The third-quarter revenue guide of $115.0–124.0 million has a midpoint of $119.5 million, above the $108.1 million reported for the second quarter (company release, 3 September 2026).
- A new product widens the market. Ambarella launched the X7 standalone AI accelerator on 15 September 2026, designed to add physical-AI processing to existing host processors at 2 to 5 watts.
- Analyst targets sit far above the price. MarketBeat listed a consensus target of $89.56 on 27 September 2026. Rosenblatt reaffirmed Buy with a $120 target on 16 September 2026.
Bear case
- No deal has been confirmed. Reports from 31 July 2026 and 30 October 2026 have produced no statement from Ambarella or NXP. The 30 October 2026 summary itself calls the talks non-binding.
- The shares trade under both moving averages. The close of $61.06 on 12 November 2026 compares with a 50-day average of $65.02 and a 200-day average of $67.17, after a 52-week closing low of $48.65 on 30 March 2026 and a close of $55.17 on 5 November 2026.
- Gross margin is below last year. Non-GAAP gross margin was 59.3% in the quarter reported 3 September 2026, inside the guide but down from 60.5% a year earlier. The GAAP net loss was $6.7 million.
- Memory constraints cloud the fourth quarter. On the 3 September 2026 call, management said constrained customer purchasing power had a slight revenue impact in the second and third quarters, with the fourth quarter uncertain.
- Targets were cut after the report. On 4 September 2026 BofA cut its Neutral target to $70 from $96, Roth cut its Neutral target to $65 from $90, and Stifel cut its Buy target to $90 (MarketBeat, 27 September 2026).
- Insiders sold after earnings. CEO Feng-Ming Wang sold 6,086 shares at $64.83 on 17 September 2026, alongside the CFO, the chief operations officer and a senior vice president at the same price. Director Christopher Paisley sold 250 shares at $70.76 on 25 September 2026 (SEC Form 4 filings).
Price setup
The last close was $61.06 on 12 November 2026. The shares closed at $55.17 on 5 November 2026, rose to $62.49 on 11 November 2026 and gave back part of that on the next session.
The 50-day average of $65.02 and the 200-day average of $67.17 both sit above the last close. The 52-week closing low is $48.65 (30 March 2026), and the 52-week intraday high is $96.69 (12 November 2025).
The shares move sharply on deal headlines: news coverage put the gain at roughly 17% to 19% on the day of the 31 July 2026 Financial Times report. The 24 November 2026 report falls inside the next two weeks, so the price can move either way on revenue, the fourth-quarter guide or a statement on the strategic review.
Catalysts ahead
- 24 November 2026: Third fiscal 2027 quarter results after the market close, call at 1:30 p.m. Pacific Time. Tests the $115.0–124.0 million revenue and 59.0–60.0% non-GAAP gross margin guidance and gives the first fourth-quarter outlook after management's memory-constraint warning.
- ~4 December 2026 (est.): Quarterly report (Form 10-Q) for the period ended 31 October 2026. Updates distributor concentration and any disclosure on the strategic review; the second-quarter 10-Q was filed on 4 September 2026, a day after results.
- Undated: Possible confirmation, denial or collapse of the reported NXP talks. A signed agreement or a statement that talks ended would reprice the shares more than the operating results would.
What would change the view
A daily close above $71.24, which would put the shares well above both the 50-day and 200-day moving averages and show them leading the S&P 500. Third-quarter revenue above the $124.0 million top of the guide, or a signed sale agreement, would also show the shares leading.
What it trades with
Ambarella is a small-cap semiconductor supplier of edge-AI vision processors for cameras and vehicles. Its price has followed NXP and acquirer headlines more than sector moves since 31 July 2026. A confirmed bid would tie the shares to the offer price. A statement that talks ended would return them to the operating story and to semiconductor and physical-AI sentiment.
The evidence, claim by claim (7)
- Second-quarter fiscal 2027 revenue was $108.1 million, up 13.2% from a year earlier and 7.7% from the previous quarter, above the $107.753 million consensus; non-GAAP earnings per share were $0.18 against $0.17 expected. Ambarella second-quarter fiscal 2027 results release · as of
- Third-quarter fiscal 2027 guidance: revenue $115.0–124.0 million, non-GAAP gross margin 59.0–60.0%, non-GAAP operating expenses $56.5–59.5 million. Ambarella second-quarter fiscal 2027 results release · as of
- Ambarella scheduled its third-quarter fiscal 2027 earnings call for 24 November 2026 at 1:30 p.m. Pacific Time, with the release after the market close. Ambarella announcement of earnings conference call · as of
- The Financial Times reported NXP Semiconductors was in talks to buy Ambarella, then valued at about $3.3 billion; neither company confirmed. Financial Times via SiliconANGLE · as of
- A report said Ambarella entered exclusive, non-binding sale talks with NXP after its board weighed several offers; no price was disclosed and no company confirmed. Crypto Briefing summary of unnamed reporting · as of
- BofA cut its Neutral target to $70 from $96, Roth cut its Neutral target to $65 from $90 and Stifel cut its Buy target to $90 after the report; the consensus target was $89.56. MarketBeat · as of
- Four Ambarella officers sold shares at $64.83 on 17 September 2026, including CEO Feng-Ming Wang (6,086 shares) and CFO John Young (3,126 shares); director Christopher Paisley sold 250 shares at $70.76 on 25 September 2026. SEC Form 4 filings · as of
Sources
- Finviz ·
- Ambarella, Inc. Announces Second Quarter Fiscal Year 2027 Financial Results · morningstar.com
- Ambarella reportedly enters exclusive sale talks with NXP Semiconductors · cryptobriefing.com ·
- SiliconANGLE ·
- Ambarella reportedly in talks to be acquired by NXP Semiconductors, shares spike · investing.com
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