Semiconductor company Ambarella Inc (NASDAQ:AMBA) recently released better than expected fourth-quarter results, its HD video chips are found in some of the hottest new gadgets and the firm grew its revenue by nearly 30% from the previous year. Despite all of that good news, AMBA stock has declined 15% over the past six months. So far this year the firm has barely moved the needle.

Ambarella stock is in investors’ bad books. The company’s relationship with action-camera maker GoPro Inc. (NASDAQ:GPRO) developed some cracks and traders lost confidence.

However, while potentially losing out on business with one of its biggest customers may have sunk Ambarella’s ship in years past, the AMBA of the present has diversified its revenue stream enough that the firm can stand to lose out on a bit of GPRO business.

Big Things for AMBA

While GPRO is certainly a big part of AMBA’s bottom line, the company has moved beyond relying solely on the action-camera maker as its lifeline. AMBA video chips can be found in all kinds of tech gadgets — from Mercedes Benz recording devices to home security products.

However, perhaps the most exciting of Ambarella’s ventures is its role in Snap Inc’s (NYSE:SNAP) social media sunglasses.

Snap generated a lot of buzz during its IPO this year because the social media microvlogging site has been a rapid success among millennials. Now, the company has introduced Snapchat-ready spectacles that are capable of recording and uploading snippets of users’ lives via an Ambarella chip.

This partnership is great news for AMBA stock, because the success of the glasses could help the firm move on even further from its reliance on GPRO.

Ambarella HD video chips are a hot commodity for social-media centered products because they produce good-quality images even in low light and are able to efficiently compress footage, making it easy to upload and share.

With all the buzz currently surrounding SNAP, it would be silly to overlook the tech behind the specs.

Strong Financials for Ambarella

Another reason investors should believe in AMBA stock is the company’s impeccable balance sheet.

Ambarella has an insanely healthy cash reserve and holds absolutely no long-term debt. Those figures suggest that even if the GoPro losses hurt AMBA significantly in the coming year — which I doubt — the firm is solid enough to weather the storm and continue expanding in new markets.

While the future of action cameras like GPRO’s is still in question, many of Ambarella’s other customers are participating in much more promising markets. The automotive industry in particular is incorporating new technology at break-neck speed, and Ambarella has been working to ensure that it will remain a part of that sector as it develops.

Later this year, AMBA is expected to release its first computer vision system developed by VisLab, an Italian tech firm specializing in autonomous driving. Ambarella’s acquisition of VisLab demonstrated that the firm was committed to diversifying its revenue streams.

In a few months when the chip comes out, AMBA stock is likely to see a lift as the new product will paint Ambarella as more than just an action-camera chip supplier and set the company up as a strong competitor in the autonomous driving space.

The Bottom Line

Worries about GoPro have caused many investors to overlook Ambarella, but the company is a solid buy. Its secure financials, promising future prospects and ability to change with the times make it a good addition to any portfolio as the stock is likely to deliver big-time gains in the long-term.

As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities.