Ambarella jumps 28% after Rosenblatt names it top physical AI pick

Shares of Ambarella Inc. climbed about 28% on Tuesday after Rosenblatt Securities named the edge artificial intelligence chipmaker one of eight technology picks for the second half of 2026. Rosenblatt kept a Buy rating and a $120 price target, which the brokerage said implied roughly 79% upside from Monday’s close.

Rosenblatt pointed to growing demand for AI processing on devices rather than in centralized cloud servers. The firm described Ambarella as a “Physical AI pure play” and highlighted the company’s position in AI vision processors designed for high performance with low power consumption near the sensor.

“Applications such as surveillance, robotics, industrial automation, drones and autonomous systems require high-performance, low-power AI vision processors close to the sensor,” Rosenblatt analyst Kevin Cassidy wrote. He added that Ambarella’s algorithm-first AI architecture is aimed at those use cases.

The stock’s rise on Tuesday extended recent gains; Ambarella shares have climbed about 74% over the past three months. Rosenblatt framed the company as a beneficiary of increased AI inference at the edge, in devices such as cameras, vehicles and industrial equipment where on-device processing reduces latency and network bandwidth needs.

Recent company results align with Rosenblatt’s focus on edge customers. Ambarella reported record fiscal 2026 revenue, with Edge AI products representing roughly 80% of sales. The company disclosed a long-term agreement with Hanwha Group covering security, robotics and industrial automation. Rosenblatt estimated the Hanwha deal could represent up to $800 million in potential revenue over more than a decade, while noting the figure is not guaranteed.

Rosenblatt’s investment case rests on more design wins and higher production volumes for Ambarella’s system-on-chip platforms. The brokerage identified enterprise uptake and expanded automotive deployments as key catalysts. It also warned that rising research-and-development spending and higher operating costs could pressure near-term financial results if expected wins do not materialize, and flagged customer and geographic concentration as ongoing risks.

In its long-term projections cited in the note, Rosenblatt expects Ambarella to reach about $526.3 million in revenue and $74.3 million in earnings by 2028, implying annual revenue growth near 14.8% from current levels.