Ambarella (NASDAQ:AMBA) & GSI Technology (NASDAQ:GSIT) Financial Analysis

Ambarella (NASDAQ:AMBA) and GSI Technology (NASDAQ:GSIT) are both technology companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Profitability

This table compares Ambarella and GSI Technology’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ambarella	-13.48%	-10.03%	-7.73%
GSI Technology	-62.90%	-21.39%	-17.73%

Valuation and Earnings

This table compares Ambarella and GSI Technology”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ambarella	$390.70 million	6.32	-$75.86 million	($1.29)	-43.34
GSI Technology	$25.12 million	4.84	-$13.25 million	($0.46)	-6.88

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

Volatility and Risk

Ambarella has a beta of 2.36, suggesting that its share price is 136% more volatile than the S&P 500. Comparatively, GSI Technology has a beta of 2.26, suggesting that its share price is 126% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Ambarella and GSI Technology, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ambarella	1	6	5	0	2.33
GSI Technology	1	0	1	0	2.00

Ambarella presently has a consensus target price of $89.56, suggesting a potential upside of 60.18%. GSI Technology has a consensus target price of $9.00, suggesting a potential upside of 184.45%. Given GSI Technology’s higher probable upside, analysts clearly believe GSI Technology is more favorable than Ambarella.

Institutional and Insider Ownership

82.1% of Ambarella shares are owned by institutional investors. Comparatively, 33.1% of GSI Technology shares are owned by institutional investors. 4.5% of Ambarella shares are owned by insiders. Comparatively, 16.6% of GSI Technology shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Ambarella beats GSI Technology on 9 of the 14 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 GSI Technology

GSI Technology, Inc. designs, develops, and markets semiconductor memory solutions to networking, industrial, medical, aerospace, and military customers in the United States, China, Singapore, Germany, the Netherlands, and internationally. It offers associative processing unit products, which are focuses on applications using similarity search in visual search queries for ecommerce, computer vision, drug discovery, cyber security, and service markets. The company also provides static random access memory (SRAM) products, such as SyncBurst for microprocessor cache and other applications; No Bus Turnaround SRAMs to address the needs of networking and telecom applications; SigmaQuad and SigmaDDR products for density and random transaction rate requirements of networking and telecom applications; Low Latency DRAMs, a solution for advanced data networking applications; Asynchronous, a main memory for small cache-less embedded processors for industrial electronics, measurement systems and cost-sensitive networking equipment, and other applications; and specialty SRAMs. In addition, it offers radiation-hardened and radiation-tolerant SRAMs for military/defense and aerospace applications, such as networking satellites and missiles. The company's products are used as components in its original equipment manufacturer customers' products, including routers, switches, and other networking and telecommunications products; military and aerospace applications, such as radar and guidance systems and satellites; test and measurement applications consisting of high-speed testers; automotive applications comprising smart cruise control; medical applications, including ultrasound and CAT scan equipment; and audio/video processing. It markets its products through a network of independent sales representatives and distributors. GSI Technology, Inc. was incorporated in 1995 and is headquartered in Sunnyvale, California.