The stock surge is attributable to expectations that the company would emerge as a serious contender to Nvidia in the domestic market.
Beijing, China-based Cambricon Technologies, a maker of general-purpose graphics processing units (GPUs) used in artificial intelligence applications and systems, has seen its shares listed on the Shanghai Stock Exchange STAR Market soar by over 123% this year.
The iShares Semiconductor ETF (SOXX), which tracks the performance of U.S.-listed semiconductor stocks, has added 17% this year, while AI frontrunner Nvidia stock is up 35.25%.
The stock surge is attributable to expectations that the company would emerge as a serious contender to Nvidia in the domestic market, especially as the U.S. AI chipmaker faces setbacks due to the U.S. chip export restrictions and the Chinese government’s security concerns regarding the use of Nvidia’s stripped-down AI chips in sensitive areas.
Stung by China curbs, Nvidia’s data center sales growth slowed in the second quarter, according to the U.S. chipmaker’s quarterly report released Wednesday evening.
Founded in March 2016 by siblings Chen Yunji and Chen Tianshi, Cambricon is now partly owned by the government. The company boasted early investments from high-profile Chinese companies, including Alibaba and Lenovo, although some of them have since sold their stakes. The company went public in July 2020, raising $369 million, and its debut was a strong one.
Subsequently, the company was blacklisted by the U.S. government along with a slew of Chinese firms in December 2022, preventing them from accessing U.S. technologies and components.
After reporting annual losses for seven consecutive years until 2023, amid significant investment in R&D, the company turned around, reporting a quarterly profit in the fourth quarter of calendar year 2024.
The company reported first-half revenue of 2.88 billion yuan ($402.7 million), a 4,000% year-over-year (YoY) jump, and a record net profit of 1.04 billion yuan $145.37 million, CNBC reported. In comparison, for the first two quarters of the year, Nvidia has reported net revenue of $90.81 billion and net profit of $45.20 billion.
Ray Wang, research director at Futurum Group, said, “The rapid surge in Cambricon’s valuation reflects not just its recent growth but also heavy anticipation of future potential,” according to a South China Morning Post report. The report noted that Cambricon’s stock traded at a trailing price-earnings (P/E) multiple of over 4,000 compared to Nvidia’s 60.
“This optimism is largely driven by regulatory and geopolitical shifts, strong domestic AI demand, and the latest DeepSeek optimisations for local hardware.”
A Bloomberg report stated that on Wednesday, Cambricon briefly surpassed liquor maker Kweichow Moutai Co., the maker of baiju spirit, as the most valued onshore stock, as it soared more than 10% before paring back some of the gains.
The gains have carried over into Thursday’s session, as Cambricon stock traded up over 8% at 1,486 yuan by midday.
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