Ambarella (AMBA) has drawn fresh attention after announcing a long term agreement with Hanwha Group to co develop and deploy edge AI systems on chip and software across several Hanwha industries.

The Hanwha agreement and recent earnings update come after a mixed stretch for the stock, with a 31.71% 90 day share price return but only a 0.68% share price return year to date and a 42.34% total shareholder return over the past year. This hints that recent momentum has picked up again.

If this kind of edge AI deal has your attention, it can be worth seeing what else is moving in the space by scanning 47 AI infrastructure stocks

So with the Hanwha deal, fresh earnings data, a new buyback plan, and the stock trading at about a 7% discount to an intrinsic estimate and around 24% below analyst targets, is there still a buying opportunity here, or is the market already pricing in future growth?

Most Popular Narrative: 22.4% Undervalued

Ambarella's most followed valuation view pegs fair value at about $97.45 per share, which sits well above the recent close around $75.67, and it leans heavily on edge AI demand as a key driver.

Sharply increasing demand for AI-powered edge devices, including portable video, robotics (notably aerial drones), and edge infrastructure, has led to a rapid expansion of Ambarella's addressable markets, as evidenced by record edge AI revenue and multiple recent, diversified design wins. This is catalyzing strong, sustained revenue growth and positions Ambarella to benefit further as additional vertical applications for edge AI proliferate.

Want to see what is underneath that optimism? The narrative leans on brisk revenue expansion, shifting margins and a punchy earnings multiple baked into that fair value.

Result: Fair Value of $97.45 (UNDERVALUED)

However, those upbeat assumptions still lean heavily on IoT driven revenue and a few concentrated customers, so any demand wobble or lost contracts could quickly challenge this thesis.

Next Steps

With mixed signals across growth expectations, concentration risk and valuation, it helps to move quickly and review the underlying data for yourself. A good place to start is with a closer look at the 3 key rewards and 2 important warning signs.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.