Value
5.7/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 5.5 |
| Fwd P/E | 1.7 |
| PEG | 10.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 62.8x
- ▸PEG: 0.35
AMBA · Why this verdict
Why Ambarella (AMBA) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.9/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Ambarella is a growing semiconductor company with a strong earnings record, but heavy dependence on one distributor and a small set of end customers, thin cash margins and a modest analyst-target upside limit the case. It is a speculative position to avoid for now.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue is highly concentrated: one customer, WT Microelectronics, accounts for 70.0% and the top 10 end customers account for 67.0%. Bear case | Concentration should ease as the customer base broadens, with the largest customer share falling below 60% over the next 12 months. | ↑Improving |
| CounterWT Microelectronics is a distributor, so the 70.0% figure may reflect channel structure rather than dependence on a single end buyer. | ||
Growth is strong, with quarterly revenue of $108.1M versus $95.5M a year earlier, about 13% year over year, and earnings growth scoring a maximum 10.0. Bull case | Revenue growth should stay above 10% year over year across the next four quarters. | →Stable |
| CounterRevenue is only slightly above the $108.5M of the October 2025 quarter, and the growth score of 5.8 for revenue shows momentum is slowing from the prior pace. | ||
The business is free-cash-flow positive but with moderate margins: an FCF margin of 8% and an FCF yield of 1.1%, against a forward P/E of 63.0x. Quality breakdown | FCF margin should improve above 12% as revenue grows over 12 months. | →Stable |
| CounterOperating and net margins both score 0.0, so the valuation depends on a profit ramp that has not yet appeared. | ||
Earnings delivery is solid: two beats and two in-line results with no misses in the last four quarters, and an average surprise of 16.76%. Avg surprise pct | EPS should meet or beat estimates in each of the next four quarters. | ↑Improving |
| CounterThe two most recent quarters were only in line (surprises of 5.34% and 5.42%), so the beat cushion is shrinking. | ||
The $66.50 price is 14.5% below the $76.16 analyst target, against 11.4% downside to the stop, a reward-to-risk of only 1.27. Upside pct | Price should advance toward the $76.16 target without breaking the $61.85 stop level over 12 months. | ↓Deteriorating |
| CounterWith beta of 2.38 and implied volatility of 87%, the stop can be reached long before the target. | ||
Revenue is highly concentrated: one customer, WT Microelectronics, accounts for 70.0% and the top 10 end customers account for 67.0%.
↑ImprovingBear case
- Expectation
- Concentration should ease as the customer base broadens, with the largest customer share falling below 60% over the next 12 months.
CounterWT Microelectronics is a distributor, so the 70.0% figure may reflect channel structure rather than dependence on a single end buyer.
Growth is strong, with quarterly revenue of $108.1M versus $95.5M a year earlier, about 13% year over year, and earnings growth scoring a maximum 10.0.
→StableBull case
- Expectation
- Revenue growth should stay above 10% year over year across the next four quarters.
CounterRevenue is only slightly above the $108.5M of the October 2025 quarter, and the growth score of 5.8 for revenue shows momentum is slowing from the prior pace.
The business is free-cash-flow positive but with moderate margins: an FCF margin of 8% and an FCF yield of 1.1%, against a forward P/E of 63.0x.
→StableQuality breakdown
- Expectation
- FCF margin should improve above 12% as revenue grows over 12 months.
CounterOperating and net margins both score 0.0, so the valuation depends on a profit ramp that has not yet appeared.
Earnings delivery is solid: two beats and two in-line results with no misses in the last four quarters, and an average surprise of 16.76%.
↑ImprovingAvg surprise pct
- Expectation
- EPS should meet or beat estimates in each of the next four quarters.
CounterThe two most recent quarters were only in line (surprises of 5.34% and 5.42%), so the beat cushion is shrinking.
The $66.50 price is 14.5% below the $76.16 analyst target, against 11.4% downside to the stop, a reward-to-risk of only 1.27.
↓DeterioratingUpside pct
- Expectation
- Price should advance toward the $76.16 target without breaking the $61.85 stop level over 12 months.
CounterWith beta of 2.38 and implied volatility of 87%, the stop can be reached long before the target.
Per-dimension breakdown
Quality
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Gross margin | 7.7 |
| Op margin | 0.0 |
| Net margin | 0.0 |
| Current ratio | 9.5 |
| FCF quality | 4.6 |
| Moat | 7.2 |
| Piotroski F | 8.9 |
- ▸FCF-positive but moderate margins (FCF margin 8%, FCF yield 1.1%)
- ▸Strong Piotroski F-Score: 8/9
Growth
7.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.8 |
| EPS growth | 10.0 |
Momentum
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 7.5 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -1.4%/30d — confirmed downtrend
Sentiment
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.0 |
| Price target | 8.7 |
| erm sentiment | 4.9 |
- ▸Analyst upside: 32%
Insider
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Modest insider selling — $1,060,264 (0.036% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.0 |
| quality rank | 0.2 |
| growth rank | 2.5 |
- ▸Conservative debt levels
Technical
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.1 |
| support resistance | 4.2 |
| 52w position | 3.7 |
Risk (lower is worse)
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 3.5 |
| days to cover | 7.1 |
| volatility | 0.0 |
| put call | 8.2 |
| implied vol | 0.0 |
| max pain risk | 7.0 |
| beta | 2.1 |
| debt equity | 9.9 |
- ▸High IV: 87%
- ▸Concentration risks: 3 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:7.2>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:33d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:1.4<1.5@spot
Warning (1)
- DEATH_CROSS:momentum=7.2>=5.0 recovering
Reward-to-Risk
1.35
Upside
+14.9%
Downside
11.1%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 56
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 2.38>1.3, MCap $2.9B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.6 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 7.9) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:1.4<1.5@spot) reinforce the read. Current asymmetry R:R is 1.35 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 7.9, Catalyst at 7.5, and Momentum at 7.2; the weakest are Technical at 4.0, Peer rank at 4.1, and Quality at 4.2. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 1.35 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Customer Concentration Risk
Trip ifWT Microelectronics share of revenue falls below 50% from current 70%.
- P2Consistent Earnings Beats
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P3Double Digit Revenue Growth
Trip ifRevenue growth falls below 5% YoY for 2 consecutive quarters.
- P4Moderate Cash Margins
Trip ifFree cash flow margin falls below 3% from current 8%.
- P5Thin Reward To Risk
Trip ifPrice falls below the $61.85 stop level from current $66.50.