Ambarella Becomes an Artificial Intelligence Stock

“Ambarella is an artificial intelligence (“AI”) company,” says the first line in a recent Ambarella (AMBA) investor presentation to Morgan Stanley. More than four and a half years ago, we wrote about how Ambarella was seeing very strong revenue growth selling semiconductor processing solutions for video in four primary segments: camera-based advanced driver assistance systems (ADAS), wearable cameras like GoPro, cameras for drones, and home automation cameras. Since that article, shares of Ambarella have fallen -50% compared to a NASDAQ return of +73% over the same time frame. Fortunately, the company is being forthcoming with investors as to why the company’s stock has performed so poorly.

We had previously remarked how a lack of transparency into the company’s financials prevented investors from seeing which segments were contributing to all that strong revenue growth. Today, we have transparency, and it shows just how rapidly all that growth has been declining over the past three years.

The “Other” category seen above is largely responsible for the sharp decline in revenues which has led to the company changing their focus towards high growth areas – security cameras, automotive ca