Cambricon Shares Surge Amidst AI Chip Demand

Cambricon Shines in the Stock Market Driven by AI

During Wednesday's midday trading, Cambricon's shares in the A-share market experienced a significant surge, briefly exceeding those of Kweichow Moutai. The stock price rose by nearly 10%, approaching a high of 1,465 yuan per share. This surge is attributed to the company's strong financial performance revealed in its semi-annual report, marking a historic turning point. The company has achieved a remarkable turnaround from significant losses to substantial profits, recording its best performance since its listing on the stock exchange. Benefiting from the boom in domestic AI demand, driven by the so-called "post-DeepSeek era," as well as strong government support for the development of self-controlled chips, Cambricon achieved a net profit attributable to the parent company of 1.03 billion yuan in the first half of the year, compared to a loss of 533 million yuan in the same period last year. Revenue also increased by approximately 43 times to 2.9 billion yuan, the best performance since its listing.

Widespread Adoption of Domestic Chips

Underlying this strong financial performance is the accelerating adoption of domestic AI chips by Chinese internet giants and startups, as an alternative to products from foreign companies such as Nvidia. Due to security concerns and supply chain risks, regulators are requiring institutions to prioritize the purchase of domestic solutions, leading to an overall improvement in market sentiment and driving the entire chip sector upward. Amid geopolitical frictions and supply uncertainties, Cambricon's market capitalization has doubled in a single month to exceed 600 billion yuan, making it the most outstanding stock in the Chinese stock market this year.

Positive Future Outlook

Analysts believe that the strategic importance of AI computing chips is increasing as the government reaffirms its support for the development of AI, smart vehicles, robotics, and other industries. These multiple positive developments have fueled optimism among investors and Wall Street investment banks. Data shows that prominent investor Zhang Jianping purchased shares in Cambricon at the end of 2024 and became one of the top ten shareholders, with a holding of 5.3388 million shares. He then increased his stake by 747,500 shares in the first quarter of this year.

Significant Profits for Investors

Based on the stock price on August 26, Zhang Jianping's shareholding was worth 8.089 billion yuan. If the average purchase price of the shares in the last two quarters of last year and the first quarter of this year is calculated, the purchase cost is approximately 3.046 billion yuan. Assuming that Zhang Jianping has not sold his shares since then, his unrealized profits could reach 5.043 billion yuan. With the significant increase in Cambricon's stock price, Goldman Sachs announced an increase in its target price to 1,835 yuan. If this target price is achieved, Cambricon's market capitalization will approach 770 billion yuan. After the stock price exceeded that of Moutai on August 27, its market capitalization has the potential to surpass many other well-known companies such as Bank of Communications, Yangtze Power, Sinopec, and Postal Savings Bank of China.

The "Moutai Curse"

Statistics indicate that several other companies have seen their shares briefly exceed the price of Moutai in the past, such as China Shipbuilding, All-China Education Group, Hepalink, Anson Information, Storm Technology, and Roborock, but their stock prices subsequently declined sharply, and even faced difficulties. This is often referred to in the market as the "Moutai Curse."

Challenges and Competition

It is important to note that despite the significant improvement in the company's profitability, competition in the industry remains intense. Nvidia still maintains an absolute leading position, and the US government recently allowed Nvidia and AMD to resume selling some chips to China. To strengthen its advantages, Cambricon has increased its support for large models such as DeepSeek, Alibaba's "Tongyi Qianwen," and Tencent's "Hunyuan." In July, the company announced a private placement of 4 billion yuan to build a large model chip platform.