Is Ambarella Stock a Buy Despite Its CFO Selling Over 6,000 Shares?

John Alexander Young, CFO of Ambarella (NASDAQ:AMBA), executed two direct open-market sales totaling 6,370 shares for a transaction value of approximately $461,815 during Dec. 17 and Dec. 18, 2025, as disclosed in the SEC Form 4 filing.

Transaction summary

Transaction value based on SEC Form 4 weighted average purchase price ($72.50); post-transaction value based on Dec. 18, 2025 market close ($72.50).

Key questions

• How does the transaction size compare to Mr. Young's historical selling activity?
  This 6,370-share sale is the largest single disposition by Mr. Young over the period since February 2024, substantially exceeding his recent median sell size of 2,500.5 shares per transaction.
• What was the impact on Mr. Young's ownership stake?
  The sale reduced Mr. Young's direct holdings by 5.84%, bringing his directly held shares to 102,738 and leaving him with no indirect holdings as of Dec. 19, 2025.
• Were any derivative awards exercised or indirect entities involved in this transaction?
  No derivative exercises or indirect transactions occurred; the sale consisted entirely of direct open-market dispositions.
• Does the sale reflect a shift in cadence or capacity constraints?
  While the transaction size is elevated relative to Mr. Young's historical median sell, his remaining direct holdings still account for over 80% of his February 2024 base, indicating significant residual selling capacity.

Company overview

* 1-year price change calculated using Dec. 18, 2025 as the reference date.

Company snapshot

• Ambarella develops system-on-a-chip semiconductor solutions for high-definition video processing, image processing, and artificial intelligence applications across automotive, security, robotics, and consumer electronics sectors.
• It generates revenue by selling integrated chipsets and software to original equipment manufacturers (OEMs) and original design manufacturers (ODMs) through direct sales and distribution channels.
• The company's primary customers include automotive technology firms, security camera manufacturers, robotics companies, and consumer electronics brands seeking advanced video and AI capabilities.

Ambarella is a semiconductor provider specializing in advanced video compression, image processing, and AI-enabled chipsets. The company leverages proprietary technology to deliver high-performance, low-power solutions for automotive, security, and industrial markets.

What this transaction means for investors

CFO John Alexander Young's sale of 6,370 Ambarella shares is not a warning sign or red flag. He still directly holds over 100,000 shares. Ambarella stock had been on a upswing in the last few months, reaching a 52-week high of $96.69 on Nov. 12, which can be a reason behind Mr. Young's decision to sell shares.

The rise in Ambarella stock is understandable given its excellent third quarter results. The company generated $108.5 million in Q3 revenue, a strong 31% year-over-year increase. The growth was driven primarily by sales of its edge AI technology, which represented 80% of its Q3 income.

Despite the revenue growth, Ambarella is not profitable. Its Q3 net loss was $15.1 million. However, that was a reduction from the prior year's net loss of $24.1 million, which is a positive sign demonstrating progress towards eventual profitability.

The company's artificial intelligence products are generating strong demand, as illustrated by its rising sales. Given the AI sector is expected to see continued expansion for years, Ambarella looks like a potentially good investment in the AI industry.

Glossary

Form 4: A required SEC filing disclosing insider trades of company stock by officers, directors, or significant shareholders.
Open-market sale: The sale of securities on a public exchange, available to any investor, rather than through private transactions.
Direct ownership: Shares held personally by an individual, not through trusts, funds, or other entities.
Indirect holdings: Shares owned through another entity, such as a trust or family member, rather than held directly.
Derivative awards: Financial contracts, like stock options, that derive value from the company's stock and may be exercised for shares.
Disposition: The act of selling or otherwise transferring ownership of an asset, such as company shares.
Weighted average price: The average price per share, weighted by the number of shares sold at each price during a transaction.
Original equipment manufacturer (OEM): A company that produces parts or systems used in another company's end products.
Original design manufacturer (ODM): A company that designs and manufactures products that are rebranded and sold by another firm.
System-on-a-chip: An integrated circuit that combines multiple computer components into a single chip for efficiency and performance.
Insider trading: The buying or selling of a company's stock by individuals with access to nonpublic, material information about the company.
TTM: The 12-month period ending with the most recent quarterly report.

Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.