Wall Street Says ‘Buy at Any Price’ as China’s Nvidia Tops 1 Trillion Yuan

Cambricon, China’s leading domestic AI chipmaker

Chinese President Xi Jinping in April laid out an “AI Plus” policy while chairing a meeting of the Communist Party’s Politburo. He called for domestic production of AI semiconductors and emphasized broader expansion of AI-related infrastructure including computing networks, telecommunications and power grids.

One company drew outsized attention after China rolled out the strategy: Cambricon Technologies, the AI chipmaker often dubbed China’s answer to Nvidia. The company is listed on Shanghai’s STAR Market, the bourse’s Nasdaq-style board. Its shares have risen 59.22% over the past six months, and its market capitalization topped 1 trillion yuan on June 30.

A symbol of China’s AI ambitions

Cambricon was founded in 2016 by brothers Chen Tianshi and Chen Yunji, both former researchers at the Chinese Academy of Sciences. The company was spun out with support from the academy, which remains its second-largest shareholder with a 15.7% stake.

Huawei was Cambricon’s first customer. In 2018, 98% of the company’s revenue came from Huawei through AI licenses for smartphones. After Huawei developed its own technology, however, Cambricon had to find a new partner. It turned to TSMC.

That relationship was cut off in 2022 when the US government added Cambricon to a trade restriction list, halting cooperation with TSMC.

China’s government then stepped in. Beijing was seeking to build up its AI industry, with domestic AI chips seen as a critical piece of that push. Cambricon has since emerged as a symbol of China’s AI drive. It now holds a 15% share of the country’s AI chip market, ranking second behind Huawei.

Cambricon’s flagship product is the Siyuan 590, an AI chip upgraded in 2024. The chip is widely seen as a cost-effective option in the AI semiconductor market, with performance estimated at 80% to 90% of Nvidia’s A100.

Cambricon swung to a net profit last year. Revenue jumped 411% from a year earlier to 6.498 billion yuan, while net income reached 2.059 billion yuan. First-quarter revenue rose 159.56% to 2.885 billion yuan, and net income climbed 185.04% to 1.013 billion yuan. Both figures beat market expectations. Full-year revenue is forecast to increase about 175% this year to 23 billion yuan.

Buy ratings intact, with targets as high as 1,903 yuan

Analysts covering Cambricon on Wall Street and in Shanghai all rate the stock a buy. Their average price target is 1,646.43 yuan.

Futu’s mobile investing platform Moomoo on June 28 set the highest target at 1,903 yuan. Morgan Stanley said Cambricon leads Chinese-made AI chips in inference applications. The bank added that the company’s goal of raising AI accelerator deployments to 500,000 units this year points to further growth ahead.

Everbright Securities set a target price of 1,367.31 yuan. The brokerage also projects earnings per share of 12.11 yuan this year, rising to 21.46 yuan in 2027 and 35.55 yuan in 2028.

Investing.com data showed Cambricon was trading at 128 times forward 12-month earnings as of June, roughly eight times Nvidia’s valuation. Bulls argue the stock still has room to run as China actively backs AI-related industries and pushes to localize AI chip hardware, software and equipment.

Potential initial public offerings by Chinese semiconductor companies CXMT and YMTC later this year could also support Cambricon’s shares. After Chinese AI company Zhipu AI listed in Hong Kong in January, successful IPOs by CXMT and YMTC could strengthen an integrated China AI market theme spanning chip design at Cambricon, AI models at Zhipu AI, and memory chips at CXMT and YMTC.

Lee Mi-a, Hankyung.com reporter, mia@hankyung.com