NEW YORK, May 29, 2026, 13:08 (EDT)
Ambarella (AMBA) fell roughly 20% Friday afternoon, with shares at $73.33 near 12:53 p.m. in New York. The move followed a small earnings beat and news of a major multi-year agreement with Hanwha of South Korea. Shares opened at $82.39 and traded as low as $71.76. The Invesco QQQ Trust was slightly up in the same period.
Ambarella is pitching edge AI, running artificial intelligence on devices like cameras and cars instead of sending data to the cloud. But the market response suggests that for AI chip stocks, a slight earnings beat isn’t always enough when expectations are set.
Ambarella, based in Santa Clara, California, posted a 16.9% jump in fiscal first-quarter revenue to $100.4 million, up from $85.9 million last year. The company booked a GAAP net loss of $18.1 million, or 41 cents per share. On an adjusted (non-GAAP) basis, Ambarella reported earnings of 11 cents a share.
FactSet analysts were looking for adjusted earnings of 10 cents a share and $100.1 million in revenue, according to Investor’s Business Daily. That report said Ambarella’s guidance for fiscal Q2 revenue, with a midpoint of $108 million, is just over the $107.1 million analysts had forecast.
CFO John Young said on the call the company is looking for a “seasonally strong” fiscal Q2, projecting revenue between $105 million and $111 million. Young said “both Auto and IoT revenue are expected to increase.” The IoT category includes connected cameras and smart devices.
Ambarella’s big news is a long-term deal with Hanwha, which the company said could top $800 million in potential revenue over a stretch of more than ten years. The agreement covers joint development and rollout of Ambarella edge-AI systems-on-chip, or SoCs, in video security, robotics, industrial automation, and life sciences.
Fermi Wang, Ambarella’s CEO, said the Hanwha deal is “one of the largest partnerships in Ambarella’s history.” Kim Dong-seon, a senior executive VP at Hanwha Group, said the agreement backed Hanwha’s investment in “intelligent vision solutions and AI technologies.” Ambarella Inc.
Wang said in the earnings release that “demand signals for edge AI remain very strong,” noting record automotive revenue for the quarter. On the call, he said AI use in commercial vehicle telematics and safety apps helped boost automotive revenue. Ambarella Inc.
The drop seemed focused on certain stocks, not the whole sector. Nvidia climbed about 1.1%. Qualcomm added roughly 3.7%. Mobileye was almost unchanged. All three tie into areas like AI, automotive or edge-computing where investors often watch names like Ambarella.
Some areas turned weaker in the results. GAAP gross margin came in at 58.4%, down from 60.0% a year ago. Non-GAAP gross margin dropped to 59.9% from 62.0%. The company reported cash, cash equivalents and marketable debt securities of $277.8 million, down from $312.6 million at the end of the last quarter. Young said inventory days increased to 145 from 99 as Ambarella built up supply ahead of new products.
Risk looks clear. Ambarella needs design wins and long-term deals to actually drive shipments, not just headlines. The company has said revenue from these new customers or wins isn’t guaranteed, warning that tariffs, how customers manage inventory, rivals, and demand forecasting could all shift actual numbers away from its guidance.
Ambarella execs Wang, Young and corporate development chief Louis Gerhardy are set for Bank of America’s Global Technology Conference in San Francisco on June 2. With shares down Friday, investors next week will probably ask less about whether Ambarella is in AI, and more about when that AI story will turn into cash flow.
