On May 29, Ambarella declined 20.62% in regular trading, trading at $72.885/share with trading volume of approximately $199 million. The steep sell-off followed a combination of a marginal Q1 earnings beat and an analyst downgrade.

Ambarella reported fiscal Q1 non-GAAP earnings of $0.11 per diluted share, up 57% year-over-year from $0.07, slightly beating the consensus estimate of $0.10. Revenue rose 16.9% to $100.4 million, also narrowly exceeding expectations of $100.1 million. The company guided fiscal Q2 revenue to $105-$111 million versus the analyst consensus of $107.1 million. However, Summit Insights Group downgraded Ambarella to Hold, triggering significant selling pressure.

While Bank of America raised its price target on Ambarella from $72 to $96, and the stock carries an average analyst rating of overweight with a mean target of $95.62, the downgrade from Summit Insights Group appeared to have a more immediate impact on market sentiment. The only marginal earnings beat left investors questioning the company's growth trajectory, amplifying the negative reaction to the rating cut.

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