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

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.

What Happened

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.

What Else to Know

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.

Company Overview

Company Snapshot

• 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.

Foolish Take

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.

Glossary

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.

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.