Why a Fund Placed a $13 Million Bet on Ambarella Stock Before a 20% Post-Earnings Drop

• New York City-based S Squared Capital increased its Ambarella holding by 35,000 shares in the third quarter.

• The overall value of the position increased by about $4.8 million.

• As of quarter-end, the fund reported holding 153,551 AMBA shares valued at $12.7 million, representing about 4.8% of fund assets.

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New York City-based S Squared Technology disclosed a buy of 35,000 shares of Ambarella (NASDAQ:AMBA) in a November 13 SEC filing, contributing to an increase in its position of about $4.8 million.

S Squared Technology reported the purchase of 35,000 additional shares of Ambarella (NASDAQ:AMBA), according to its November 13 SEC filing. The transaction increased the fund’s total Ambarella position to 153,551 shares valued at $12.7 million as of September 30. This marks an approximately 1% increase in the fund’s 13F reportable assets, bringing Ambarella’s weighting to approximately 4.8% of portfolio AUM.

Top holdings after the filing:

• NASDAQ: LSCC: $25.4 million (9.7% of AUM)

• NASDAQ: KRYS: $19.3 million (7.3% of AUM)

• NASDAQ: SYM: $18.9 million (7.2% of AUM)

• NASDAQ: KTOS: $18.2 million (6.9% of AUM)

• NYSE: PRLB: $15.6 million (5.9% of AUM)

As of Friday, Ambarella shares were priced at $71.73, up about 4.5% over the past year and well underperforming the S&P 500’s roughly 16% gain in the same period.

• Ambarella develops system-on-a-chip semiconductor solutions for video compression, image processing, and artificial intelligence, serving markets such as automotive cameras, security cameras, robotics, and consumer imaging devices.

• The company generates revenue through the sale of integrated circuits and related solutions to original equipment and design manufacturers, leveraging technology for high-definition video and AI processing.

• Its main customers include automotive OEMs, security camera manufacturers, robotics companies, and consumer electronics brands operating globally.

Ambarella, Inc. is a leading provider of advanced semiconductor solutions focused on video, imaging, and AI processing. The company leverages proprietary system-on-a-chip technology to deliver high-performance, low-power solutions for automotive, security, and consumer device applications.

S Squared’s additional Ambarella shares were purchased before the company’s late-November earnings report, which sent the stock down nearly 20% despite record revenue and accelerating growth. That sequencing matters: The fund was buying into the setup, not reacting to the selloff.

Ambarella reported third-quarter fiscal 2026 revenue of $108.5 million, up 31% year over year, with edge AI revenue hitting its sixth consecutive quarterly record. Non-GAAP earnings hit $11.9 million, while free cash flow reached nearly 15% of revenue year to date. Management also raised full-year revenue growth guidance to as much as 38%, an all-time high for the company.

Ultimately, it seems the stock’s reaction reflected caution around near-term margins and fourth-quarter guidance, not a reversal in demand. Ambarella exited the quarter with $295 million in cash and marketable securities, giving it ample runway to fund R&D as edge AI adoption expands across automotive, security, and robotics markets.

13F reportable AUM: Assets under management that must be disclosed in quarterly SEC Form 13F filings by institutional investment managers.
AUM (Assets Under Management): The total market value of investments managed by a fund or investment firm on behalf of clients.
Net position change: The difference in the number or value of shares held in a particular security after a transaction.
Stake: The total ownership or investment a fund or individual holds in a specific company or asset.
Weighting: The proportion of a particular asset or holding relative to the total value of a portfolio.
Trailing twelve months (TTM): The 12-month period ending with the most recent quarterly report.
CAGR (Compound Annual Growth Rate): The annualized rate of return for an investment over a specified period, assuming profits are reinvested.
Forward P/E ratio: A valuation metric comparing a company’s current share price to its forecasted earnings per share over the next year.
System-on-a-chip (SoC): An integrated circuit that combines all components of a computer or electronic system onto a single chip.
Original Equipment Manufacturer (OEM): A company that produces parts or equipment that may be marketed by another manufacturer.

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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Kratos Defense & Security Solutions, Krystal Biotech, and Symbotic. The Motley Fool recommends Proto Labs. The Motley Fool has a disclosure policy.

Why a Fund Placed a $13 Million Bet on Ambarella Stock Before a 20% Post-Earnings Drop was originally published by The Motley Fool