Cambricon's Stock Soars, Challenging Tech Giants in the AI Chip Market

Cambricon Challenges Giants in the AI Market

Shares of Cambricon, a Chinese AI chip company, experienced a remarkable surge on Wednesday, briefly surpassing the share price of Kweichow Moutai, approaching 1465 yuan per share, and marking an increase of nearly 10%. This surge is driven by the company's strong financial results in the first half of the year.

Historic Turnaround in Financial Performance

The company's semi-annual financial data revealed a historic turnaround in its performance, with net profits reaching 1.03 billion yuan, compared to losses of 533 million yuan in the same period last year. Revenue also increased by approximately 43 times to 2.9 billion yuan, the company's best performance since its listing on the stock exchange. This turnaround is attributed to increased domestic demand for AI solutions in the post-DeepSeek era, along with strong government support for the development and production of domestic chips.

Growing Demand for Domestic Chips

Cambricon is benefiting from the growing trend of Chinese tech giants and startups adopting domestically produced AI chips as an alternative to products from foreign companies like Nvidia. This shift is driven by security concerns and supply chain risks, with regulators favoring the procurement of domestic solutions. This has led to an overall improvement in market sentiment and support for the entire chip sector.

Significant Growth in Market Value

Amid geopolitical tensions and supply chain uncertainty, Cambricon's market value has doubled in a single month to exceed 600 billion yuan, making it the best-performing stock in the Chinese stock market this year.

Positive Outlook from Institutions

Financial institutions believe that the strategic importance of AI chips is increasing, driven by the government's renewed emphasis on supporting the development of AI, smart cars, and robots. This has attracted the attention of investors and Wall Street investment banks. Data indicates that prominent investor Zhang Jianping purchased Cambricon shares at the end of 2024 and became one of the top ten shareholders in the company, subsequently increasing his stake in the first quarter of this year.

Future Prospects

With the rise in Cambricon's share price, Goldman Sachs has raised its target price to 1835 yuan. If this target is achieved, the company's market value will approach 770 billion yuan, potentially leading to it surpassing the market value of other major companies.

The "Moutai Curse"

It is worth noting that several other companies have briefly surpassed Moutai's share price in the past, but subsequently experienced a significant decline in their stock prices. Some analysts warn that this may be an indicator of a price bubble or the "Moutai curse."

Intense Competition

Despite the significant improvement in Cambricon's profitability, competition in the chip sector remains intense. Nvidia maintains a leading position in the market, and the US government has recently allowed Nvidia and AMD to resume selling some chips to China.

Strengthening Capabilities

To strengthen its position in the market, Cambricon is working to expand its support for large AI models such as DeepSeek, Alibaba's "Tongyi Qianwen," and Tencent's "Hunyuan." In July, the company announced a capital increase of 4 billion yuan, which will be allocated to building a chip platform for large AI models.