Ambarella stock jumped on Friday after the maker of chips for edge AI applications crushed estimates for its fiscal second quarter and raised its sales targets for the current quarter and full year.
The Santa Clara, Calif.-based company late Thursday said it earned an adjusted 15 cents a share on sales of $95.5 million in the quarter ended July 31. Analysts polled by FactSet had expected earnings of 5 cents a share on sales of $90 million. In the year-earlier period, Ambarella lost an adjusted 13 cents a share on sales of $63.7 million.
For its fiscal third quarter ending Oct. 31, Ambarella forecast sales of $104 million, based on the midpoint of its guidance. Analysts were looking for sales of $91.1 million. In the same quarter last year, Ambarella generated sales of $82.7 million.
"We are experiencing strong secular growth in the edge AI market, with an expanding breadth of applications driving unit demand," Chief Executive Fermi Wang said in a news release. Applications for Ambarella chips include automotive video sensors, surveillance cameras and aerial drones.
"With more than 36 million edge AI processors shipped to date, we are an established market leader," he said.
Edge computing refers to processing done at the outer edge of networks where data is created and consumed.
The company also increased its fiscal 2026 revenue growth estimate to a range of 31% to 35%, or $379 million at the midpoint. Wall Street was modeling $349.8 million. In fiscal 2025, it posted sales of $284.9 million, up 26%.
Ambarella Stock Scores Price-Target Hikes
On the stock market today, Ambarella stock soared 16.8% to close at 82.48. Earlier in the session, it climbed as high as 93.44.
At least eight Wall Street analysts raised their price targets on Ambarella stock after the Q2 report.
Susquehanna analyst Christopher Rolland reiterated his positive rating on Ambarella stock and upped his price target to 100 from 90.
Ambarella's future clearly lies in processors for Internet of Things, rather than automotive, Rolland said in a client note Friday. IoT applications include portable video, robotic aerial drones, and edge infrastructure, he said.
Further, Ambarella stock is on the IBD Tech Leaders list.
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