On Wednesday, Rosenblatt maintained a Buy rating on Ambarella (NASDAQ:AMBA), with a steady price target of $85.00. The firm anticipates that Ambarella will report first-quarter fiscal year 2025 earnings and outlook in line with expectations.
The forecast follows an extended period of inventory correction, with anticipated quarter-over-quarter growth driven by higher average selling prices (ASPs) for the company's 5nm CV5 family of system-on-chips (SoCs), which are now shipping for revenue.
The analyst noted that while an earnings report matching expectations is positive, the discussion by management regarding the momentum in the design of the next-generation 5nm CV3 family of SoCs is likely to be more significant for Ambarella's share price. Investing in Ambarella is seen as favorable due to the trend towards higher ASPs.
Ambarella's video processors currently have ASPs of approximately $6 to $7, while the CV2 family, which accounted for around 60% of fiscal year 2024 revenue, has ASPs in the range of $12 to $13. The CV3 family is expected to command an ASP between $40 to $400.
The firm also highlighted that announcements of new designs could emerge from markets such as professional surveillance, robotics, and China's advanced driver-assistance systems (ADAS). With Ambarella's position as a leading provider of AI and general AI inference stage SoC architecture, Rosenblatt continues to recommend the stock. The company's advancements in technology and its potential growth in various markets remain central to the firm's positive outlook on Ambarella's stock performance.
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