Ambarella's Q4 2025 Earnings Call: Contradictions in Vision Processor Revenue, Growth Drivers, and Geopolitical Risks

These are the key contradictions discussed in Ambarella's latest 2025 Q4 earnings call, specifically including: Vision Processor Revenue and ASP Expectations, Growth Drivers and Expectations, Vision Language Model opportunities, Vision Processor Business Expectations, and Geopolitical Impact on Operations:



Revenue and Profitability Improvement:
- Ambarella reported revenue of $84 million for fiscal Q4, exceeding the high end of their guidance range by 5%, and 2% sequential increase.
- The company returned to non-GAAP profitability in the second half of fiscal 2025.
- Improvement was driven by the movement from cyclical economic and geopolitical challenges, supported by strong growth in edge AI and new product revenue from the CV5 and CV7 families.

Edge AI and Product Launches:
- Edge AI represented 70% of Ambarella's total revenue for fiscal 2025, with record revenue in Q4.
- The company reported significant customer engagements and new product launches, such as the CV7 family, contributing to production revenue for the first time.
- The focus on edge AI enabled sustained revenue growth despite excess inventory digestion in the first half of the year.

Geographic and Market Growth:
- The United States, Japan, Korea, and Europe remained strong markets for Ambarella, while China maintained 15% exposure.
- Automotive revenue increased mid-single digits, and IoT revenue led by 5-nanometer products was up more than 30% year-over-year.
- Growth was driven by the secular growth of edge AI strategies, particularly in enterprise security, automotive, and consumer electronics markets.

Conservatism in Revenue Outlook:
- Ambarella expects mid- to high-teens revenue growth in fiscal 2026, despite a strong Q4, with cautious outlook for the second half.
- This conservatism is attributed to uncertainty related to government policy decisions and potential tariff impacts on customer supply chains.
- The company aims to maintain growth in key markets while managing potential risks associated with geopolitical policy changes.

Investment in Next-Generation Technology:
- Ambarella is committed to the development of 2-nanometer technology for next-generation AI processors, aiming to enhance power efficiency and reduce die size.
- The focus on 2-nanometer technology is expected to leverage both high-end and low-end products, with test chips anticipated late this year and customer production by year-end.
- This investment supports continued innovation in edge AI, particularly with the increasing adoption of open-source reasoning models like DeepSeek.