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Should You Buy Shares of Ambarella After the Company Beat Q3 Earnings Estimates?

Stock MarketsDec 06, 2021 09:30AM ET
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© Reuters. Should You Buy Shares of Ambarella After the Company Beat Q3 Earnings Estimates?

The shares of leading artificial intelligence company Ambarella Inc . (NASDAQ:AMBA) have surged in price over the past few weeks on the back of the company’s impressive financial performance in its last reported quarter. However, amid prevailing uncertainties due to the resurgence of COVID-19 cases and an ongoing global semiconductor shortage, will AMBA stock be able to maintain its rally in the near future? Let's find out.Santa Clara, Calif.-based Ambarella Inc. (AMBA) offers semiconductor solutions for high-definition (HD) and ultra-high-definition (UHD) compression image processing and network processing. The company's technologies allow the creation of video footage for wearable and automotive cameras, drones, and virtual reality cameras.

The company topped analyst estimates for its third-quarter earnings and its shares have since witnessed an unabated price rally. The company reported adjusted earnings of $0.57 per share for the quarter, beating the consensus estimate by 16.2%. Its $92.17 million in revenue surpassed the consensus estimate by 2%. AMBA's shares jumped 25% in price last week. CEO Fermi Wang attributed the company's improved earnings to its high-margin "transition into a deep learning AIoT processing company."

Though the company's operational execution remains solid, semiconductor supply dynamics remain challenging, and component shortages at other companies could significantly influence AMBA's performance in the coming months.

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Should You Buy Shares of Ambarella After the Company Beat Q3 Earnings Estimates?
 

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