Ambarella (NASDAQ:AMBA) and GSI Technology (NASDAQ:GSIT) Critical Review

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets 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 currently has a consensus price target of $89.56, suggesting a potential upside of 44.95%. GSI Technology has a consensus price target of $9.00, suggesting a potential upside of 175.23%. Given GSI Technology’s higher probable upside, analysts plainly believe GSI Technology is more favorable than Ambarella.

Volatility & Risk

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

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ambarella	$417.80 million	6.53	-$75.86 million	($1.29)	-47.89
GSI Technology	$24.73 million	5.09	-$13.25 million	($0.53)	-6.17

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.

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	-79.50%	-22.89%	-19.35%

Institutional & Insider Ownership

82.1% of Ambarella shares are owned by institutional investors. Comparatively, 33.2% 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 large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Ambarella beats GSI Technology on 9 of the 14 factors compared between the two stocks.

About Ambarella

Ambarella, Inc. is a fabless semiconductor company that develops system-on-a-chip (SoC) products for video processing and computer vision. Its chips combine image processing, video encoding and artificial intelligence capabilities for devices that capture and analyze visual information. The company’s products are used in applications including automotive systems such as advanced driver-assistance and driver-monitoring systems, security cameras, robotics and other Internet of Things devices. Ambarella also supplies technology for consumer video products, including cameras and drones.

About GSI Technology

GSI Technology, Inc. is a semiconductor company that develops and supplies high-performance memory and processing solutions. Its product portfolio has historically included static random-access memory (SRAM) devices, including synchronous SRAM products designed for applications requiring fast data access and high bandwidth. The company also develops associative processing technology for data-intensive computing. Its Gemini Associative Processing Unit (APU) platform is designed to accelerate workloads such as artificial intelligence inference, natural-language processing, similarity search and other applications that involve searching large data sets.