Ambarella AMBA has encountered turbulence, shedding 7.7% this year, contrasting sharply with the robust 17.2% expansion of the Zacks Electronic-Semiconductor industry. This downtrend mirrors the company’s recent financial struggles amidst ongoing measures to rectify customer inventory issues.
Yet, Ambarella remains steadfast in its quest for new clientele, a move set to reignite its growth trajectory. Recently, AMBA inked a strategic pact with Leapmotor. This partnership will primarily focus on crafting premium intelligent driving solutions within the energy vehicle genre. Leapmotor is set to develop smart vehicles powered by Ambarella’s potent CV3-AD SoCs.
The CV3-AD SoC boasts ASIL-B/D functional safety standards, guaranteeing hardware AI acceleration. Furthermore, this SoC offers ample room for AI and high-performance computing tasks, including centralized fusion of raw LiDAR data.
These attributes will empower Leapmotor to deliver cost-effective yet superior electric vehicles with intelligent controls.
Ambarella Riding the Wave of the Growing ADAS Market
Ambarella is heavily investing in augmenting its Advanced Driver Assistance Systems (ADAS) capabilities, capitalizing on a market projected to witness a 11.7% CAGR, according to a report by Markets and Markets. By 2028, the global ADAS market is expected to hit a staggering $14 billion mark.
The ADAS arena features prominent players like Ford Motor, General Motors, and Tesla, who produce end products. Meanwhile, entities such as Qualcomm, NVIDIA, and Texas Instruments manufacture intermediary products such as automotive cameras and SoCs pivotal in the final product assembly.
In the ADAS domain, Ford has incorporated these advanced features into its own and Lincoln lineups for enhanced vehicle safety. General Motors integrates these cutting-edge technologies into its Cadillac range, while the leader in North American electric vehicles, Tesla, relies on innovative ADAS SoCs and automotive cameras.
In the ongoing year, AMBA sealed multiple ADAS deals, including collaborations with a smart vehicle security startup, Canopy, backed by Ford Motor. Furthermore, Ambarella has joined forces with Neusoft Reach and SANY Group. Noteworthy is Ford’s adoption of Ambarella’s CV25 AI computer vision SoC for the Pickup Cam system through Canopy.
Moreover, Ambarella has introduced System on Chips for AI dash cams that integrate front-facing ADAS, namely CV75AX and CV72AX. Additionally, AMBA broadened its portfolio with a 5nm CV75S range, offering the ADAS segment a compellingly efficient platform to handle multi-modal vision-language models. Furthermore, the firm unveiled CV3-AD635 and CV3-AD655 SoCs, set to facilitate the development of highway and urban autopilot systems and automated parking features for vehicles.
Concluding Remarks
With an impressive suite of proprietary video and image processing system-on-chips, Ambarella stands at the cusp of capitalizing on the vast growth potential within the ADAS and video-AI market in the long haul.
Despite this promising outlook, Ambarella grapples with risks that could dampen the prospects of this Zacks Rank #3 (Hold) entity in the near term. Challenges include the adverse impact of customer inventory reductions on top-line growth, escalating expenses to fast-track orders, secure additional capacity, as well as global tariff uncertainties and unfavorable macroeconomic conditions.
Furthermore, Ambarella’s valuation appears stretched at present levels, underscored by a low Value Score of F. Hence, investors are advised to remain patient for a more opportune entry point into Ambarella.
