Ambarella shorts rebuild quietly ahead of November earnings

Ambarella heads into its November 24 earnings report with short sellers adding back positions after a sharp unwind, options traders turning more bullish than usual, and the Street sitting roughly 38% above the current price but divided on whether the recovery thesis holds.

Short interest has crept back up over the past week, rising 0.6% to just under 12% of free float. That follows a steep 16% unwind over the prior month, when shares in Ambarella were being returned at pace. The partial rebuild is modest in absolute terms but tells a useful story: bears who covered into early October are testing the water again at current levels. Borrow cost remains negligible at 0.57%, and availability is abundant at roughly 408%, meaning there are more than four shares available to lend for every one currently borrowed. The lending market puts no constraint on new short positions, and the short score has ticked up to 56.3 this week from 54.7 ten days ago, its highest level in that window. That score sits in the 17th percentile on days-to-cover and short-score rank, flagging that while the short book is meaningful, it is not at extreme levels relative to the broader market.

Options positioning tells the opposite story to the short sellers. The put/call ratio has dropped to 0.57, more than a standard deviation below its 20-day average of 0.63, its lowest level in weeks. Call demand is running ahead of put demand, a notable shift given the stock is down 1.7% on the week and 4.4% over the past month. That contrast, shorts edging back in while options traders lean bullish, is the most interesting tension in the setup right now.

The Street reflects the same split in a different form. The mean analyst price target is $87.55 against a current price of $63.22, implying roughly 38% upside, yet the bullish case is far from uniform. After Q2 results in early September showed revenue of $108.1M (up 13.2% year on year) and a non-GAAP gross margin of 59.3%, several firms cut targets sharply. Roth Capital moved from $90 to $65, keeping a Neutral rating. BofA Securities trimmed from $96 to $70, also staying Neutral. Stifel lowered from $106 to $90 while holding Buy. Rosenblatt stayed at $120 Buy throughout. The direction of post-earnings target moves was almost entirely downward, even from bulls, which narrows the practical upside case relative to the headline average. The forward earnings yield, at 1.7%, and a PE of around 60x reflect a stock the market is still pricing for growth delivery rather than current profitability. The 12-month forward EPS momentum score (70th percentile) is the strongest factor on the sheet; short score and days-to-cover rank both sit in the 17th percentile, consistent with the bearish pressure noted in positioning.

The bull and bear arguments in this stock are structural rather than near-term. The bull case centres on the X7 and CVflow chip portfolio, which targets edge AI inference at 2 to 5 watts and avoids dependence on data-centre accelerators. Management raised its five-year SAM outlook from $8.5B to $22.9B out to FY32. The bear case points to concentration in early-stage ADAS adoption (any major system failure slows design-in cycles), potential China trade restrictions, and the ongoing cost pressure from leading-edge process technology where yield risk is real. Bears would also note that the CFO and COO both sold shares on September 17, not under 10b5-1 plans, alongside the CEO, who sold 6,086 shares at $64.83. The net insider position over the past 90 days is minus 48,468 shares worth roughly $3.9M. None of those sales were at elevated prices relative to today, which limits the signal, but the cluster of non-planned sales across senior executives the same day is worth noting.

On the alt data side, Ambarella's buyback spend in Q2 ran 144% above the same quarter a year earlier at $2.44M, the largest Q2 buyback figure in two years. That is a minor absolute number for a $2.8B market cap company, but the direction of capital return has turned sharply more active. Wikipedia attention for the stock is running below its own 90-day average, suggesting retail interest remains subdued despite the edge AI narrative.

Ambarella's most recent two earnings prints both saw the stock fall on the day, down 6.3% after the September 2026 report and down 3.2% after the prior quarter. The five-day move after the September print recovered to roughly plus 1%, but the initial reaction has been negative twice running. With the next report 34 days away, the question is whether the partial short rebuild and bullish options positioning resolve into a cleaner pre-earnings trend, or whether the Street's target cuts signal more downward revisions are still to come.