Up 25% in the Last 12 Months, Can Ambarella Stock Keep Climbing in 2026?

Key Takeaways:

• Edge AI Leader: Ambarella has shipped over 46 million Edge AI chips and now offers 12 different Edge AI processors.
• Price Projection: Based on current execution, AMBA stock could reach $99 by January 2029.
• Potential Gains: That target points to a 44% total return from the current price of $68.72.
• Annual Return: Investors could see roughly 15% annual growth over the next 2.6 years.

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Ambarella (AMBA) opened its fiscal 2027 with solid Q1 results. Revenue came in at $100.4 million, up 17% from a year ago and slightly above the midpoint of guidance. Gross margin held at 59.9%, and the company posted a non-GAAP profit of $0.11 per share.

• Automotive revenue hit an all-time quarterly record, with strong double-digit growth led by commercial fleet telematics and safety systems.
• IoT made up about three-quarters of sales, with enterprise security cameras rising while consumer products dipped seasonally.
• The company signed a long-term agreement with South Korea’s Hanwha worth over $800 million across more than 10 years.
• Robotics design wins topped 15, with lifetime revenue above $100 million and more than 30 customers in the pipeline.

Despite the rebound, Ambarella trades at $68.72, leaving room for investors who believe Edge AI is just getting started.

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What the Model Says for Ambarella Stock

We looked at Ambarella as the AI market shifts from training in data centers toward inference at the edge. This change plays to Ambarella’s strengths.

• Edge AI keeps processing close to the device. That lowers latency, cuts power use, and improves privacy.
• Ambarella packs perception, AI acceleration, video processing, and CPU functions into a single chip, something very few rivals can match.
• New long-term agreements add another layer. These multi-year deals lock in volume and pricing for five years or more. They should make revenue steadier and more predictable over time.

Using 14% annual revenue growth and 8.6% operating margins, our model projects the stock reaching $99 within 2.6 years.

This assumes a 79.3x price-to-earnings multiple, down slightly from the current forward P/E of 83.3x.

The high multiple reflects Ambarella’s early-stage profitability as new products ramp.

Our Valuation Assumptions

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Our Valuation Assumptions

TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.

Here’s what we used for AMBA stock:

1. Revenue Growth: 14%

Growth is being driven by new products and new markets.

The 5-nanometer CV72 and CV75 chips, built for generative and agentic AI, are in a steep production ramp.

The CV7 enters production by year-end, and the 2-nanometer CV8 follows in early fiscal 2028.

The telematics market alone holds 100 million vehicles, growing 10% a year, with only about 15% to 20% currently AI-enabled.

2. Operating margins: 8.6%

Ambarella’s margins are improving as higher-value chips replace older ones.

The average selling price sat at $15 in Q1, but newer CV products command much more.

Management guides to a long-term gross margin range of 59% to 62%, with operating leverage building as revenue scales.

3. Exit P/E Multiple: 79.3x

Ambarella trades near 83x forward earnings today. We assume slight compression to 79.3x.

The premium reflects strong design-win momentum in robotics, automotive, and edge infrastructure.

As profits grow, the multiple should ease toward more normal levels.

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What Happens If Things Go Better or Worse?

Chip makers face supply swings and product transitions. Here’s how Ambarella stock might perform under different scenarios through January 2031:

• Low Case: If revenue grows 11.8% a year and net margins settle near 7.7%, investors still see a 45.2% total return (8.3% annually).
• Mid Case: With 13.1% growth and 8.4% margins, the model points to an 87.7% total return (14.5% annually).
• High Case: If Edge AI demand pushes 14.4% growth and margins reach 8.9%, returns could hit 136.4% total (20.3% annually).

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The range depends on how quickly long-term agreements convert to revenue, how fast robotics and edge infrastructure scale, and whether memory supply tightness eases.

In the low case, DRAM shortages and slower product ramps weigh on results.

In the high case, agentic AI demand accelerates while new chips lift both volumes and pricing.

How Much Upside Does Ambarella Stock Have From Here?

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All it takes is three simple inputs:

• Revenue Growth
• Operating Margins
• Exit P/E Multiple

If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!