Needham analyst N. Quinn Bolton downgraded Ambarella to Underperform from Hold, saying that while the stock price is up sharply in the pre-market on the company's Q1 earnings beat and above-consensus Q2 guidance, the market may be "mis-pricing" the risks related to China "entity list". The analyst assigns a 30% chance of a bear case under which Ambarella's two largest professional security camera customers in China - Hikvision and Dahua - are placed on the "entity list" and a 60% base case scenario under which those firms are not designated but the U.S.-China trade war continues. Bolton concludes that even if a comprehensive trade agreement is reached in the near term, Ambarella's current valuation may prevent its stock from participating in the rebound.