AMBA Should I Buy
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Ambarella Inc (AMBA) is not a strong buy for a beginner, long-term investor at this moment. While the company shows promising growth in edge AI solutions and has positive momentum in hedge fund buying, its financial performance is weak with declining net income, EPS, and gross margin. The technical indicators are neutral, and there are no strong proprietary trading signals or significant catalysts to justify immediate action. It is better to wait for clearer signals or improved financials before investing.
The MACD is positive and expanding, indicating bullish momentum. RSI is neutral at 57.234, and moving averages are converging, suggesting no clear trend. The stock is trading near a key pivot level of 63.47, with resistance at 67.183 and support at 59.757.
Hedge funds are significantly increasing their buying activity (+169.73% last quarter).
Analysts have raised price targets recently, with some highlighting strong growth potential in edge AI solutions and autonomous robotics.
Upcoming earnings report on February 26, 2026, could provide further clarity on financial performance.
Declining financial performance in Q3 2026, with net income down 37.24% YoY and EPS down 39.66% YoY.
Gross margin has dropped slightly to 59.55%.
Post-market price drop of -1.32% and overall weak market sentiment (-1.54% SP500 change).
In Q3 2026, revenue increased by 31.21% YoY to $108.45M, but net income dropped by 37.24% YoY to -$15.11M. EPS also fell by 39.66% YoY to -0.35, and gross margin declined slightly to 59.55%.
Analyst ratings are mixed. Some firms, like Rosenblatt and Stifel, have raised price targets and maintain a Buy rating, citing strong edge AI growth and diversification. Others, like BofA and Roth Capital, maintain Neutral ratings, noting gross margin pressures and limited operating leverage. Price targets range from $80 to $115, with a median target around $85.
