Today, AI-focused chipmaker Ambarella (NASDAQ:AMBA) is in the cross-hairs of growth investors. This emerging player in the semiconductor space has generated a ton of attention of late. On Wednesday, shares of AMBA stock have rocketed more than 25% higher to close the day.
Ambarella’s focus as an AI and HD-focused chip maker has become popular. These chips are increasingly used for deep neural network processing globally. Accordingly, given the strong secular catalysts underpinning these growth markets, AMBA stock is one many investors are closely watching.
Though Ambarella has a market capitalization just under $5 billion, it’s one of the smaller players in this domain. Accordingly, many investors seeking a stock with tremendous upside appear to be willing to take a flyer on AMBA stock. However, today, there’s another big catalyst driving this chipmaker higher.
Let’s dive into what’s taking Ambarella on a nice ride.
AMBA Stock Higher on Massive Earnings Beat
Today, Ambarella reported its Q2 earnings. Much to the surprise of investors, this earnings report beat by a wide margin.
The company reported revenue growth of 58% year over year, to $79 million. This revenue beat was driven by better-than-expected performance in the company’s automotive and security camera businesses.
On the bottom line, Ambarella showed strong non-GAAP earnings of 35 cents per share. This beat the average analyst consensus by 40%, a rather wide margin.
Investors seem to be focused in on the company’s growth market opportunities, particularly in Asia. Of note, the company’s two largest customers reportedly provided approximately three-quarters of Ambarella’s overall revenue. These customers focus on Asian markets.
Additionally, Ambarella reported success in growing its system-on-a-chip (SoC) market share outside of Asia. Growth in this key segment has provided the company with the confidence it needed to raise its earnings guidance moving forward.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
