Ambarella On Collision Path With NVIDIA
A potential unicorn – at the forefront of CV (Computer Vision) and AI (Artificial Intelligence), along with a top-tier team composed of brilliant minds that have worked in companies like Intel, Sun Microsystems, and IBM. Ambarella (NASDAQ: AMBA) stock is up 106% over the last 5 years. In just the last week of June, it increased almost $200m in its market cap. AMBA is an AI silicon company that creates system-on-a-chip (SoC) solutions that are implemented in artificial intelligence applications for video, image and deep neural network processing.
The prying question: could Ambarella be ‘THE Next NVIDIA,’ as it continues to eat NVIDIA’s market share?
Ambarella was founded with only the focus of creating high-definition video encoders for the broadcast market in 2004. After which AMBA transitioned in 2008 to further its market, as it realized it could start utilizing the same technology to professional security and consumer camera industries. In the proceeding years, Ambarella started materializing in numerous consumer products like – GoPro, Dropcam by Google Nest, dash cams by Garmin, drones and more. And finally in 2014 it introduced its automotive OEM solutions – leading to the debut of its computer vision processors in 2018 – for autonomous driving.
In terms of a performance measure, all the way from 2020, when tested alongside NVIDIA, Amberalla’s CV2 and NVIDIA’s Xavier chips, had similar computational speeds, but Ambarella’s required significantly lower battery consumption – outdoing NVIDIA – not an easy feat.
Moving forward at an accelerated speed – in November 2022, it collaborated with eInfochips to design AI camera products. In January 2023, Ambarella and Continental (BATS:CON) partnered for the advanced driver assistance and highly automated driving. In February 2023, Samsung Foundry & Ambarella further announced a collaboration in order to advance AI performance and raise the bar for autonomous driving.
Let us also put one more fact into notable consideration – AMBA is currently debt-free as a company.
Further, the largest asset management companies (AMCs) in the world show definite interests – BlackRock Inc. (NYSE: BLK) who owns 8.76% of the total outstanding shares of Ambarella, and Vanguard Group, Inc. who increased its position, making it the largest institutional investor in Ambarella with 9.57%. Presenting in parallel, Vanguard holds 8.33%, and Blackrock Inc. 7.44%, in NVIDIA. Could the two largest AMCs be affirming underlying strengths in Ambarella that are generating such conviction in AMBA?
Ambarella’s CEO/co-founder Fermi Wang, owns several patents related to digital video, including one of the main MPEG-2 and MPEG-4/AVC patents. Fermi was the CEO of Afara Websystems, alongside co-founder Les Kohn, the second employee hired by Afara and current CTO of Ambarella – a respected innovator and leader in chip architecture due to his work at Intel in the 90’s, where he drove the development of 64-bit architecture processors. Afara Systems, a testament to its success, was acquired by Sun Microsystems within a year. Current CFO, Brian C. White brings 30 years of finance, corporate strategy, business development, and such experiences from companies including Nvidia, Hitachi GST, IBM and Deloitte.
Do these signs preview the inevitable collision with the 1000-pound market gorilla, NVIDIA? And what company’s semiconductor chip and application will it be in the video-screen that we’ll be watching from?