Ambarella stock plunges on weak Q3 revenue forecast
Shares of semiconductor company Ambarella (AMBA) are plummeting on a third-quarter revenue forecast that fell short of analyst expectations. The company also reported mixed second-quarter results, in which revenue was in line with estimates, but adjusted earnings missed. Yahoo Finance Live breaks down the latest numbers from Ambarella.
Video Transcript
BRAD SMITH: We've also got to talk about shares of semiconductor company Ambarella. Not a company we talk about all the time, but they are plunging today after forecasting third quarter revenue well below estimates. We saw revenue fall to $62 million in the second quarter from nearly $81 million a year ago.
We're taking a look at shares right now, the reaction. They are moving lower by about 20% for shares of AMBA. AMBA is your ticker symbol there for anybody keeping tabs on this one. And no doubt, one of our trending stocks here on the Yahoo Finance platform today, Rachelle.
RACHELLE AKUFFO: It's true. I mean, we saw some downgrades. We saw one from TD Cowen there to market perform from outperform, reducing their price target to $65 from $90. The stock has really been under pressure as we look year-to-date. I mean, it was already declining pre-market this morning. But as you can see, they're off about 26% year-to-date and really taking a hit this morning as well.
That weak revenue forecast for Q3 not helping. Also seeing some issues when it came to core video processing, in the P&L and strategic revenue as well. So some concerns there. But Ambarella has, at least according to Seeking Alpha, they have a hold rating. So analysts really trying to make sense of this environment for Ambarella at the moment.
BRAD SMITH: Yeah. Just briefly here, one thing I will add on this is a statement from Fermi Wang, who is the President and CEO of Ambarella. They anticipate their customers inventory levels will normalize by the end of the year and perhaps set them up for a return to growth in the next fiscal year.
So that part of their projection or their forecast also goes on to say, "Our mid to long term outlook for our AI inference processor," there's another AI mentioned here this earnings season, their business remains positive and R&D really focused right now on products targeting more sophisticated AI inference workloads here. So a lot more chatter about AI. Ambarella, of course, had to make sure that they weave that into their conversation too here. Rachelle.
