Ambarella, Inc. (AMBA): A Bull Case Theory 

We came across a bullish thesis on Ambarella, Inc. on Business Invest’s Substack by Francesco Ferrari. In this article, we will summarize the bulls’ thesis on AMBA. Ambarella, Inc.’s share was trading at $70.92 as of December 1st. AMBA’s forward P/E was 123.46 according to Yahoo Finance.

Ambarella, Inc. (AMBA) designs high-performance chips that enable advanced video and visual data processing. Its core technology allows cameras to not only capture but also interpret visual information, powering products such as dashcams, drones, and security systems. The company is now evolving beyond traditional imaging toward artificial intelligence-driven vision applications, particularly in automotive and robotics, where real-time perception is critical for autonomous functions.

With a market capitalization of $3.56 billion, Ambarella’s recent momentum reflects a significant turnaround. While its three-year compound annual revenue growth rate stands at -0.5%, revenue surged 57.9% over the past year, signaling a strong rebound. The company maintains robust profitability metrics with a 59.8% gross margin and a 10.6% free cash flow margin, although returns on invested capital remain negative, reflecting ongoing investment in next-generation AI technologies.

Ambarella’s stock has delivered a 7.7% CAGR over the past five years, demonstrating resilience amid market volatility, though its beta of 2.10 indicates higher-than-average sensitivity to market movements. As Ambarella accelerates its transition toward AI vision systems for vehicles and intelligent machines, its strong technical expertise and improving fundamentals position it to capture growing demand for edge-based perception solutions. This strategic shift could enhance long-term scalability and valuation as the company pivots from niche video processing toward broader AI-driven platforms across mobility and robotics.

Previously we covered a bullish thesis on Monolithic Power Systems, Inc. (MPWR) by Hidden Market Gems in April 2025, which highlighted the company’s fabless operations, strong pricing power, and diversified customer base offering smart AI exposure. The company’s stock price has appreciated approximately by 65.23% since our coverage as the thesis played out with robust AI demand. Francesco Ferrari shares a similar outlook but emphasizes Ambarella’s focus on AI vision systems.

Ambarella, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 41 hedge fund portfolios held AMBA at the end of the second quarter which was 47 in the previous quarter. While we acknowledge the risk and potential of AMBA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMBA and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.