GoPro (GPRO)  is plummeting after yet another disappointing quarter, but investors of action camera chip supplier Ambarella (AMBA)  can keep their heads up.

GoPro shares are down about 4% mid-day Friday to $11.45 after reporting a weak Q3 Thursday after the markets close. The actions camera maker missed revenue and earnings per share estimates, posting $240.6 million in revenue and loss of 60 cents per share. Analysts were anticipating $313.4 million in revenue and loss of 35 cents per share.

GoPro, which also missed full-year revenue guidance and fourth-quarter projected revenue, has seen its shares continue to plummet after a series of weak execution with new gadgets. In fact, shares are down about 87% since its record-high of $86.97 in 2014. 

While GoPro struggles to turn the corner along with other peers in the gadget sector such as FitBit (FIT) -- FitBit plummeted over 30% after disappointing earnings this week -- GoPro chip supplier Ambarella continues to move onward and upward. 

Chipmaker Ambarella, which relied on GoPro for about 50% of revenue when it went public in 2012, has slowly but steadily diversified away from the camera maker and gained exposure to more stable markets. And the semi is well-positioned for further upside thanks to its unique video processing technology.

Compared to 2015 when GoPro made up approximately 30% of Ambarella's revenue, GoPro is estimated to contribute to just 10%, said Stifel Nicolaus analyst Kevin Cassidy by phone, adding that the percentage will likely stay the same in 2017. 

Ambarella is increasingly spending its capital toward other end-markets such as autonomous vehicles, Cassidy said. 

"Home security is the fastest growing market," he said, adding that the Santa Clara, Calif.-based semi's long-term growth strategy has pivoted around diversification. 

The semi has four main target markets: security, automotive, sports and broadcast content processing.  

"The design of the chips is to handle video," Cassidy said, further explaining that other semis such as Qualcomm (QCOM) and Intel (INTC) have tried to gain exposure to video processing. 

"This is a core technology that would make Ambarella attractive to acquire because they have a core technology that nobody else has," he added.

Cassidy further said Qualcomm, Intel or even Nvidia (NVDA) could eventually take a look at Ambarella. Still, Nvidia hasn't historically been an active acquirer while Qualcomm just agreed to pay about $38 billion for NXP Semiconductors (NXPI) . Intel is currently digesting its $16.7 billion purchase of Altera last year. 

Ambarella has also been growing over 20% annually and is run by a strong management team with impressive achievements. 

Ambarella co-founder and CEO Feng-Ming Wang wrote the patent for MPEG and JPEG when he was working on his PhD degree. Company's CTO Les Kohn is the mind behind scalable processor architecture (SPARC) chips that are still used by Intel. His company Afara Websystems was bought in 2002 by Sun Microsystems, which was subsequently acquired by Oracle (ORCL) in 2009. 

"These people are world class designers at the core," Cassidy said.

Shares of Ambarella climbed up 3% mid-day Friday to $58.01. Ambarella is up about 4% year-to-date.

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