Cambricon Briefly Outpaces Moutai as China's Priciest Stock, Fueled by AI Chip Demand

TradingKey - On August 27, Cambricon's stock surged nearly 10% during intraday trading, breaking through the 1,400 yuan mark and reaching a peak of 1,464.98 yuan, surpassing Moutai to become the priciest stock of A-share, with the total market capitalization briefly exceeded 600 billion yuan. 

The previous day, Cambricon released its mid-2025 financial report, showing a staggering 4,347.82% year-on-year increase in first-half revenue, reaching 2.881 billion yuan, with a net profit of 1.038 billion yuan, marking a turnaround from losses to profitability.

Cambricon's stock price first broke the 1,000-yuan threshold on August 20, and it has maintained this high level for six consecutive trading days. In its latest report, Goldman Sachs raised its 12-month target price for the stock by 50% from 1,223 yuan to 1,835 yuan, reaffirming its "buy" rating. This represents a potential 38% upside from the closing price of 1,329 yuan on August 26.

Goldman Sachs noted in its report that domestic cloud providers' capital expenditures are surging. For instance, Tencent's capital expenditure in Q2 2025 increased by 119% year-on-year. The investment bank has revised its forecast for Chinese cloud market capital expenditures upward, seeing positive implications for AI chip suppliers like Cambricon.

Cambricon’s disclosed financial results reveal significant growth in the first half of 2025, primarily driven by its cloud product line, which generated 2.87 billion yuan in revenue, accounting for 99.6% of total income. The cloud product line offers cloud AI chips, accelerators, and training machines, aligning with the current cloud market expansion trend, indicating Cambricon's strategic positioning in the AI wave.

On the technological front, Cambricon claims mastery of key technologies for conducting complex chip physical design under advanced processes like 7nm, applying these successfully to several chips.

Regarding large models, Cambricon has expanded its training software platform to support the DeepSeek, Qwen, and Hunyuan series models, adding support for mainstream reinforcement learning frameworks and Qwen models. Its verification accuracy and overall performance are on par with mainstream competitors.

Meanwhile, local model iterations are being adapted to next-generation domestic chips. Goldman Sachs believes this reduces customer reliance on single suppliers, creating market opportunities for domestic firms like Cambricon, especially amid uncertainties over tariffs and data security concerns.

Despite growth in both revenue and profit, Cambricon continues to invest heavily in R&D. In the first half of 2025, R&D expenses reached 456 million yuan, a 2.01% increase over the same period last year. Goldman Sachs highlighted Cambricon’s plan to invest 4.5 billion yuan in AI chip and software R&D over the next three years, a plan approved by the Shanghai Stock Exchange, underscoring the company's commitment to technological innovation and why it remains bullish on Cambricon.

Is Cambricon's Stock Overheated?

Since achieving its first quarterly profit in Q4 2024, Cambricon has seen robust performance and soaring stock prices, up 114% year-to-date, with a 39% increase in just the last five days. Some analysts, however, caution about potential risks facing the company.

As a fabless chip design company, Cambricon faces supply chain stability risks. In 2022, the U.S. Department of Commerce placed Cambricon on the "Entity List," requiring U.S. companies to obtain licenses to export technology to Cambricon. Additionally, certain products containing specific U.S. technologies are prohibited from being exported to Cambricon, potentially affecting its supply chain stability.

Moreover, financial reports indicate that Cambricon's top five customers contribute 85.31% of accounts receivable and contract assets, reflecting a high reliance on major clients, which may hinder risk diversification.