Ambarella stock drops nearly 14% on weak outlook

By Wallace Witkowski

'Cyclical headwinds persist and continue to pressure our financial results,' video chip maker CEO says amid AI gold rush

Ambarella Inc. shares fell in the extended session Tuesday after the video chipmaker's outlook fell short of expectations despite a better-than-feared loss on the quarter.

Ambarella shares (AMBA) dropped 13.7% after hours, following a 5.4% rise in the regular session to close at $81.96.

The Santa Clara, Calif.-based company said it expects revenue between $60 million and $64 million in the second quarter, while analysts surveyed by FactSet had forecast revenue of $66.9 million.

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"The cyclical headwinds persist and continue to pressure our financial results, but we are taking our inference AI strategy to the next level with our R&D investment focused on the build-out of our CV3 platform as well as new derivatives of our third-generation AI technology," said Fermi Wang, Ambarella chief executive, in a statement.

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The company makes components like systems-on-chip for high-resolution video compression, image and radar processing, and neural network processing for edge AI applications, advanced driver assistance systems and robotics applications.

Ambarella reported a first-quarter loss of $35.9 million, or 91 cents a share, compared with a loss of $10.8 million, or 29 cents a share, in the year-ago period.

The adjusted loss, which excluded stock-based compensation expenses and other items, was 15 cents a share, versus net income of 44 cents a share in the year-ago period.

Revenue fell to $62.1 million from $90.3 million in the year-ago quarter. Analysts had forecast an adjusted loss of 20 cents a share on revenue of $62 million.

Ambarella shares finished Tuesday down 0.3% on the year, versus a 9.5% year-to-date gain by the S&P 500 index and a 24.4% rally by the tech-heavy Nasdaq Composite Index .

-Wallace Witkowski

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05-31-23 0817ET

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