Robots are much more useful — and scary — when they’ve got eyes on us. Ambarella (NASDAQ:AMBA), the company powering those eyes, had a breakout 2021.

Ambarellas’ chips sees all

Drones, cameras, and CCTVs use Ambarella’s computer chips to process images and videos.

For years, Ambarella depended on GoPro — one of its biggest customers. When GoPro demand fell in 2015 and its stock crashed — so did Ambarella’s.

• In the last 5 years, Ambarella developed more advanced computer vision (CV) chips for industrial and automotive applications.
• CV chips made up just under 15% of sales in 2021 — Ambarella’s target being 45% in two years.

The company looks a lot different today. After years of stagnant growth, sales picked up significantly in 2021 — growing 8%, 28% 58%, and 64% in its past four quarters.

Its stock rose accordingly — soaring 120% in 2021 — outperforming the broader semiconductor industry i.e the iShares Semiconductor ETF (NASDAQ:SOXX) with a 2021 return of 43%.

Speeding towards the auto industry

Ambarella doesn’t break down sales by segment so it’s unclear which unit is growing the fastest. But based on partnerships, Amba is noticeably gaining traction in the auto sector:

• In 2021, electric truck maker RivianRIVN
  began shipping trucks with Ambarella chips.
• Ambarella’s auto sales pipeline tripled to $1.8B from $600M in under a year.

During that time, Amba plowed half its sales back into R&D — positioning it among the most buzzing industries including robotics, self-driving vehicles and internet of things (IoT).

With a $5B market cap, Amba is much smaller than its competitors. Its R&D budget of $156M is also much smaller than Nvidia’s (NASDAQ:NVDA) $5B — the dominant advanced computing chipmaker.

Investors: Riding the growing chip demand

How does Amba trading at a forward price-to-sales ratio of 14x compare to competitors?

• Cheap compared to the high-growth chipmaker Nvidia.
• Expensive compared to Intel (NASDAQ:INTC) — which owns auto chip developer, Mobileye.

Looking forward: Amba had a history of beating earnings in 2021 — despite supply shortages impacting many of its customers. With chip demand looking strong going into 2022 — investors could find opportunity in Amba’s recent 30% — who fell alongside other high-growth stocks.