AMBA Stock: If You’re Bearish on Ambarella, Inc., Read This!

AMBA StockAMBA Stock Could Greatly Benefit from This Technology

Ambarella, Inc. (NASDAQ:AMBA) faced a major setback last week, touching its 52-week lows in the wake of the latest Chinese stock market crash that lent to a huge decline in the local markets. But AMBA stockholders must overlook this non-fundamental decline in the Ambarella stock price as some very positive fundamental developments are taking place for the company.

This year’s Consumer Electronics Show (CES 2016) in Las Vegas might have come as a blessing in disguise for Ambarella. One of the technologies, that the company is betting on big, received a significant boost through CES 2016, as countless big and small companies came out to showcase this technology—hint, hint: commercial flying cameras!

Believe it or not, the new developments in this technology are set to make this dream a reality much earlier than we had expected.

The Federal Aviation Administration (FAA) has reported that since the launch of its online drone registration web site last month, more than 181,000 Americans have so far registered with the authority.


Taking it further, the FAA has now approved a bunch of test sites for the first-ever drone airports—that is, commercial airports for drone flights. (Source: “Aerodrome Is The First Commercial Airport For Drones,” TechCrunch, January 10, 2015.)

In fact, the drone technology is now being redefined. Traditionally referred to as unmanned aerial vehicles (UAVs), it seems like drones will no longer be just unmanned. The first human-sized drone has also been introduced this week at the CES. (Source: “The EHang 184 Is A Human-Sized Drone Taking Off At CES,” TechCrunch, January 6, 2016.)

But while everybody is talking about drones, nobody is talking about the mechanics that bring this technology to the mainstream.

H2 Chip: A Game-Changer for Ambarella

One won’t be wrong to say that Ambarella is currently the biggest player in the drone market with the most sophisticated technology at hand.

The company surprised the world with two new introductions at the CES, which are groundbreaking, to say the least.

Ambarella showcased two new chips in Vegas last week, the “H2” and “H12” chips, the best-yet concoction in the video-making technology for sports and flying cameras. But I’m particularly placing my bets on the former.

The H2 chip is a next-generation video processing chip for flying cameras that runs on low power, but shoots in fine 4K ultra hi-definition (4K UHD) quality and offers high frame rates per second.

Simply put, drones powered by H2 will shoot smoother videos, even in low-light conditions, especially in fast-action videography in the highest 4K-grade of video shooting available out there. The stronger, faster H2 will also cut down the lag in streaming hi-definition videos and will offer a longer battery life for the device.

Ambarella has previously offered chips for handheld cameras that shot video in 4K UHD.

Bear in mind that the 4K UHD technology has taken the world by storm and is fast rendering old televisions obsolete. But watching in 4K UHD is one thing; shooting in 4K UHD is another.

The Bottom Line on AMBA Stock

This is just the beginning for Ambarella. The drone technology is still in its nascent phase and has a lot of room to grow. Take note that the flying camera segment made up only 10% of its total revenue in the latest quarter, but going forward, it could be the next big revenue-puller.

Ambarella’s chips currently power the biggest drone-makers in the industry, including commercial drone-maker DJI and surveillance drone-maker Hikvision. The growth in this industry will further drive higher demand for Ambarella’s high-quality chips in the coming days as commercial drones become ubiquitous.

AMBA stockholders must keep an eye on these shifting industry dynamics and stay put with their investments for the long haul.