Ambarella Accelerates: Strong Q1 Results and Optimistic Outlook in a Volatile Market
Ambarella, a leading provider of video and image processing solutions for the automotive, industrial, and consumer markets, has delivered an impressive start to its fiscal year 2026. The company's first quarter revenue came in at $85.9 million, exceeding the upper half of its guidance due to continued strength in its HAI (Human-Augmented Intelligence) business.
Both Ambarella's 5-nanometer CV5 and CV7 product families as well as its 10-nanometer CV2 product families contributed to the revenue growth. Moreover, the company's average selling price increased as it captures more value per design win. Edge AI revenue, which integrates one of Ambarella's proprietary deep learning AI accelerators, was over 75% of Q1 revenue, marking the fourth consecutive quarter of record AI revenue.
This achievement demonstrates the successful execution of Ambarella's edge AI strategy in a volatile market. The company's IoT applications increased mid-single digits sequentially and now represent about three-quarters of its total revenue. Meanwhile, its automotive business declined low single digits sequentially, although it was up more than 20% on a year-over-year basis.
Ambarella has also revised its fiscal 2026 revenue growth estimate to the range of 19% to 25% or approximately $348 million at the midpoint. While the company continues to expect no material direct impact from current tariffs, the larger-than-normal guidance range reflects conservatism due to uncertainty around indirect impacts.
Despite geopolitical uncertainty, Ambarella remains confident in the long-term drivers of its edge AI strategy. The business is fully intact, with multiple factors driving optimism for the edge AI market. These include recent discussions with customers, representative customer engagements, and the evolution of the company's edge AI serviceable available market.
Ambarella's SAM (Serviceable Available Market) comprises more than 20 different automotive and IoT edge AI applications with a 5-year compounded annual revenue growth rate in the high teens. The market is expected to reach almost $13 billion in fiscal 2031, with expansion into edge infrastructure where data from multiple endpoints is aggregated and incremental advanced AI features and services can be supported.
Ambarella's President and CEO, Dr. Fermi Wang, expressed satisfaction with the quarter's results, highlighting the company's ability to execute its edge AI strategy in a challenging market environment. The future looks promising for Ambarella as it continues to capitalize on emerging trends in the automotive, industrial, and consumer markets.
Ambarella will be participating in various investor events throughout the second fiscal quarter, including Bank of America's Technology Conference and Redburn Atlantic's West Coast bus tour. The company has made its Q1 results press release, transcripts, historical results, and SEC filings available on its website for investors to access.
