Applied Materials (NASDAQ:AMAT) and Ambarella (NASDAQ:AMBA) Financial Survey

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

Risk and Volatility

Applied Materials has a beta of 1.53, indicating that its stock price is 53% more volatile than the S&P 500. Comparatively, Ambarella has a beta of 1.66, indicating that its stock price is 66% more volatile than the S&P 500.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Applied Materials	$27.18 billion	5.04	$7.18 billion	$7.65	22.03
Ambarella	$252.47 million	12.52	-$169.42 million	($3.86)	-19.64

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

Insider & Institutional Ownership

80.6% of Applied Materials shares are held by institutional investors. Comparatively, 82.1% of Ambarella shares are held by institutional investors. 0.2% of Applied Materials shares are held by insiders. Comparatively, 5.7% of Ambarella shares are held 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.

Profitability

This table compares Applied Materials and Ambarella’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Applied Materials	22.95%	39.50%	22.12%
Ambarella	-62.38%	-23.52%	-19.93%

Analyst Ratings

This is a summary of recent recommendations for Applied Materials and Ambarella, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Applied Materials	1	6	15	0	2.64
Ambarella	0	4	8	0	2.67

Applied Materials currently has a consensus price target of $215.38, indicating a potential upside of 27.81%. Ambarella has a consensus price target of $85.42, indicating a potential upside of 12.67%. Given Applied Materials’ higher probable upside, analysts clearly believe Applied Materials is more favorable than Ambarella.

Summary

Applied Materials beats Ambarella on 9 of the 14 factors compared between the two stocks.

About Applied Materials

Applied Materials, Inc. engages in the provision of manufacturing equipment, services, and software to the semiconductor, display, and related industries. The company operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment develops, manufactures, and sells various manufacturing equipment that is used to fabricate semiconductor chips or integrated circuits. This segment also offers various technologies, including epitaxy, ion implantation, oxidation/nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching, and selective deposition and removal, as well as metrology and inspection tools. The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity comprising spares, upgrades, services, remanufactured earlier generation equipment, and factory automation software for semiconductor, display, and other products. The Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays; organic light-emitting diodes; and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smart phones, and other consumer-oriented devices. It operates in the United States, China, Korea, Taiwan, Japan, Southeast Asia, and Europe. The company was incorporated in 1967 and is headquartered in Santa Clara, California.

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.