Investors use Ambarella as a tell for GoPro, given its role as a key chip supplier for the action camera maker, and Friday they clearly didn't like what they saw.
"During the quarter, we saw strong sales from our existing markets, including professional IP security cameras and automotive aftermarket dash cameras, as well as from new markets, including flying cameras and home monitoring cameras," Ambarella CEO Feng-Ming Wang said on a Thursday earnings call with analysts. (The company's fiscal third-quarter earnings beat expectations.)
"[But] this growth has partially [been] offset by the expected headwinds in our wearable sports camera market, due to high inventory levels at the customers."
However, bulls are willing to look past that disappointment in exchange for exposure to Ambarella's other sought-after markets such as drones.
For GoPro, it's a different story. Ambarella's report only fueled concerns about how the company will navigate the all-important holiday season.
The company's stock has lost some 70 percent so far this year, or more than $5 billion in market cap.