Contrasting Ambarella (NASDAQ:AMBA) & Lam Research (NASDAQ:LRCX)

Ambarella (NASDAQ:AMBA) and Lam Research (NASDAQ:LRCX) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, analyst recommendations, dividends, earnings and institutional ownership.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Ambarella and Lam Research, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ambarella	1	4	7	2	2.71
Lam Research	0	8	26	0	2.76

Ambarella presently has a consensus target price of $96.00, suggesting a potential upside of 18.28%. Lam Research has a consensus target price of $291.75, suggesting a potential upside of 2.47%. Given Ambarella’s higher possible upside, analysts plainly believe Ambarella is more favorable than Lam Research.

Risk & Volatility

Ambarella has a beta of 2.17, indicating that its stock price is 117% more volatile than the S&P 500. Comparatively, Lam Research has a beta of 1.81, indicating that its stock price is 81% more volatile than the S&P 500.

Profitability

This table compares Ambarella and Lam Research’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ambarella	-19.42%	-12.16%	-9.59%
Lam Research	30.94%	66.21%	31.61%

Earnings and Valuation

This table compares Ambarella and Lam Research”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ambarella	$390.70 million	9.10	-$75.86 million	($1.78)	-45.60
Lam Research	$18.44 billion	19.31	$5.36 billion	$5.30	53.72

Lam Research has higher revenue and earnings than Ambarella. Ambarella is trading at a lower price-to-earnings ratio than Lam Research, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

82.1% of Ambarella shares are owned by institutional investors. Comparatively, 84.6% of Lam Research shares are owned by institutional investors. 5.3% of Ambarella shares are owned by company insiders. Comparatively, 0.3% of Lam Research shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Lam Research beats Ambarella on 11 of the 15 factors compared between the two stocks.

About Ambarella

Ambarella, Inc. develops semiconductor solutions that enable high-definition (HD) and ultra HD compression, image signal processing, and artificial intelligence processing worldwide. The company's system-on-a-chip designs integrated HD video processing, image processing, artificial intelligence computer vision algorithms, audio processing, and system functions onto a single chip for delivering video and image quality, differentiated functionality, and low power consumption. Its solutions are used in automotive cameras, such as automotive video recorders, electronic mirrors, front advanced driver assistance system camera, cabin monitoring system and driver monitoring system camera, and central domain controllers for autonomous vehicle; enterprise and public class, and home security camera; and robotics and industrial application, including identification/authentication cameras, robotic products, and sensing cameras, as well as cameras for the enterprise, home, public spaces, and consumer leisure comprising wearable body cameras, sports action cameras, social media cameras, drones for capturing aerial video or photographs, video conferencing, and virtual reality applications. The company sells its solutions to original design manufacturers and original equipment manufacturers through its direct sales force and distributors. Ambarella, Inc. was incorporated in 2004 and is headquartered in Santa Clara, California.

About Lam Research

Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits. The company offers ALTUS systems to deposit conformal films for tungsten metallization applications; SABRE electrochemical deposition products for copper interconnect transition that offers copper damascene manufacturing; SOLA ultraviolet thermal processing products for film treatments; and VECTOR plasma-enhanced CVD ALD products. It also provides SPEED gapfill high-density plasma chemical vapor deposition products; and Striker single-wafer atomic layer deposition products for dielectric film solutions. In addition, the company offers Flex for dielectric etch applications; Kiyo for conductor etch applications; Syndion for through-silicon via etch applications; and Versys metal products for metal etch processes. Further, it provides Coronus bevel clean products to enhance die yield; Da Vinci, DV-Prime, EOS, and SP series products to address various wafer cleaning applications; and Metryx mass metrology systems for high precision in-line mass measurement in semiconductor wafer manufacturing. The company sells its products and services to semiconductors industry in the United States, China, Europe, Japan, Korea, Southeast Asia, Taiwan, and internationally. The company was incorporated in 1980 and is headquartered in Fremont, California.