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Ambarella Inc(NASDAQ:AMBA) shares are plunging in the wake of a disappointing first-quarter earnings report. In fact, AMBA stock is off by more than 10% so far in Wednesdays trade.

Our Luke Lango, in his preview of the quarter, acknowledged the riskbut called the stock a good long-term play because of the promise its chips which first powered the GoPro Inc (NASDAQ:GPRO) camera could be a key ingredient in the next decades autonomous transportation revolution.

They think the chips will go into self-driving cars.

Everyone in tech is betting on autonomy. Apple Inc. (NASDAQ:AAPL) is said to be doing it. Alphabet Inc(NASDAQ:GOOGL) already has. Tesla Inc(NASDAQ:TSLA) has gotten rich on it. Uber stands accused of stealing it.

Ambarella could be the next booms arms merchant. The argument is that you buy the dip on the hype, wait until either the field takes off, and profit!

This veteran tech reporter has a different story to tell about AMBA stock.Come with me, then, into the cave of riches known as Moores Law.

Moores Law the idea that the chip density can double (and prices can halve) every year or two has been the driving force of technology for 50 years.

It may be the only thing the 2017 stock market believes in, given that the five most-valuable companies in the world Apple, Google, Amazon.com Inc. (NASDAQ:AMZN), Facebook Inc. (NASDAQ:FB) and Microsoft Corporation(NASDAQ:MSFT) all use it to power their clouds.

But Moores Law isnt just a story of wealth. Its also a story of wealths destruction.

Because chips get better every year, PCs rot like fruit on a warehouse floor. Their value declines rapidly with time. Companies that make chips, even mighty Intel Corporation (NASDAQ:INTC), have to race ever-faster just to keep up. Then there is Moores Second Law: As chips become more complex, their production becomes more capital-intensive. Only three of the hundreds of companies that emerged from the PC revolution are still with us Apple and Microsoft are the other two.

Most of the diamonds in Moores cave are glass. Interesting in that theyre made of the same thing silicon.

Ambarella chips see. They process incoming light or other waves into digital information, then translate that information into inputs a drone can use to avoid obstacles, or a car can use to drive itself.

They are a vital ingredient in self-driving cars, which must process all kinds of incoming data, on all kinds of frequencies, to replicate what you do every day when you decide to make that left turn into incoming traffic.

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Ambarella Inc (AMBA) Stock Is a Lost Cause in Moore's World - Investorplace.com