Ambarella (AMBA, Financial) (“AMBA” or “Company”) is a fabless semiconductor company focused on high-end image signal processing and computer vision (CV) systems on a chip (SoCs). The Company’s long-term strategy is focused on computer vision processing solutions, primarily for security cameras and automotive applications, including autonomous driving. To develop the next generation solutions, the Company has been investing into R&D which hides the true profitability of the existing business. However, we are very excited about the potential for the next generation solutions as the Company is in discussions with over 50 potential customers and believes the new products will start ramping up in the second half of 2020.12 Nonetheless, we started buying the stock when we believed the market was ascribing barely any value to the new solutions as it was worried about higher expenses and the effects of the trade negotiations with China.
AMBA delivered a strong third quarter but guidance was soft as the Company believed its Chinese customers built extra inventory to prevent any possible shortages due to government action.
From FPA Capital Fund (Trades, Portfolio)'s fourth-quarter 2019 commentary.
Also check out:- Fpa Capital Fund Undervalued Stocks
- Fpa Capital Fund Top Growth Companies
- Fpa Capital Fund High Yield stocks, and
- Stocks that Fpa Capital Fund keeps buying
- First Pacific Advisors Undervalued Stocks
- First Pacific Advisors Top Growth Companies
- First Pacific Advisors High Yield stocks, and
- Stocks that First Pacific Advisors keeps buying
