Ambarella (NASDAQ:AMBA) Q2 FY2027: Adjusted EPS Beats, Revenue Up 13.2% YoY, Edge AI Hits Record

Ambarella (NASDAQ: AMBA) reported Q2 FY2027 results for the period ended July 31, 2026, posting adjusted EPS of $0.18 against a consensus estimate of $0.17, while revenue of $108.1 million rose 13.2% year over year from $95.5 million. The company said edge AI revenue reached record levels in the quarter, driven by its 5nm CV75 and CV72 AI system-on-chip products.

Q2 FY2027 Results

• Revenue: $108.1 million, up 13.2% from $95.5 million in Q2 FY2026
• Adjusted EPS: $0.18, beating the $0.17 consensus estimate; compares with adjusted EPS of $0.15 in Q2 FY2026
• GAAP net loss: $6.7 million, or $0.15 per diluted share, narrowed from a GAAP net loss of $20.0 million, or $0.47 per diluted share, in Q2 FY2026
• GAAP gross margin: 57.7%, compared with 58.9% in the prior-year quarter; non-GAAP gross margin was 59.3% versus 60.5% a year ago
• Cash and marketable securities: $272.3 million at quarter end, versus $277.8 million at the end of Q1 FY2027

What Drove the Results

Adjusted EPS of $0.18 beat the $0.17 consensus by approximately 5.9%, while revenue of $108.1 million was roughly in line with analyst expectations. Non-GAAP net income rose 28.1% year over year to $8.2 million from $6.4 million. The GAAP operating loss narrowed sharply to $8.1 million from $22.0 million in Q2 FY2026, partly aided by a one-time $9.0 million reduction in GAAP research and development expense, reflecting the release of a deposit liability following the termination of a development project. Because this credit is non-recurring, it was excluded from non-GAAP results.

The divergence between GAAP and adjusted net income remains material: $8.2 million in non-GAAP net income versus a $6.7 million GAAP net loss, a gap driven primarily by $22.7 million in stock-based compensation and $1.2 million in acquisition-related costs excluded from the non-GAAP calculation. Total operating expenses fell $7.7 million year over year to $70.6 million on a GAAP basis. CEO Fermi Wang cited balanced sequential growth in Auto and IoT markets, and noted that the introduction of the company's first stand-alone AI Accelerator, the X7, and new 7-year distribution agreements with Macnica and Capgemini are expanding Ambarella's serviceable market in edge AI and Physical AI.

Q3 FY2027 Guidance

For Q3 FY2027, ending October 31, 2026, Ambarella guided revenue of $115.0 million to $124.0 million, compared with an analyst consensus estimate of $119.3 million. Non-GAAP gross margin is expected to be in the range of 59.0% to 60.0%, and non-GAAP operating expenses are projected at $56.5 million to $59.5 million. The guidance midpoint of $119.5 million sits marginally above the consensus, suggesting the company anticipates continued year-over-year growth from Q2's $108.1 million base.

Wall Street View

Analyst sentiment on AMBA heading into the print leaned constructive, with the most recent consensus as of September 1, 2026 showing 9 Buy ratings and 3 Strong Buy ratings alongside 7 Hold ratings and no Sell or Strong Sell recommendations. No specific price target changes were available in the source data following the Q2 report.

Investor Takeaway

The Q2 report confirms that Ambarella's edge AI ramp is real, with record revenue in that segment and adjusted profitability expanding year over year, but investors should note that gross margins, both GAAP at 57.7% and non-GAAP at 59.3%, contracted relative to Q2 FY2026, a trend worth monitoring as the company scales new product lines. The new distribution partnerships with Macnica and Capgemini, each structured as 7-year agreements, represent a shift in go-to-market strategy that could broaden Ambarella's reach into enterprise and industrial edge AI deployments beyond its traditional customer base. Shares fell 5.60% on Thursday, September 3, 2026, while the S&P 500 gained 1.05%, suggesting investors are weighing the gross margin trajectory and the one-time nature of the R&D credit against an otherwise improving operating profile.