Why Ambarella Stock Just Crashed

Core Insights - Ambarella's stock experienced a significant decline of 14.4% despite exceeding earnings expectations, reporting a profit of $0.27 per share against an anticipated $0.21, with sales of $106.5 million compared to the forecast of $104.1 million [1][3] Financial Performance - In fiscal Q3 2026, Ambarella achieved record quarterly revenue, with a 31% year-over-year increase, although gross margin slightly decreased to 59.6% [2][3] - Despite reporting a pro forma profit, the company incurred a GAAP net loss of $0.35 per share, an improvement from the previous year's loss of $0.58 per share [3] Market Position - Ambarella's market capitalization stands at $4 billion, with a price-to-free cash flow ratio of nearly 58, indicating that the stock may be overvalued despite the positive cash flow of $42.9 million year-to-date [5][6] - The CEO expressed optimism about future opportunities, particularly in AI integration, forecasting Q4 revenue between $97 million and $103 million, surpassing Wall Street's expectation of $95.6 million [5]