Ambarella's stock experienced a 24-hour plunge of 6.16%, with the significant downward movement occurring in after-hours trading following the release of the company's first quarter fiscal 2027 financial results.

The edge AI semiconductor company reported revenue of $100.4 million, representing a 16.9% year-over-year increase and slightly exceeding analyst estimates. However, investors focused on concerning margin trends, with GAAP gross margin declining to 58.4% from 60.0% in the same period last year, while non-GAAP gross margin decreased to 59.9% from 62.0% year-over-year.

While Ambarella reported improved bottom-line results with reduced losses and non-GAAP net profit increasing to $5.0 million, the margin pressure appeared to weigh on investor sentiment. The company's second quarter revenue guidance of $105 million to $111 million may have also fallen short of some market expectations, overshadowing positive developments including a long-term edge AI agreement with Hanwha valued at over $800 million in potential revenue.