Cambricon Technologies Warns of Trading Risks After Stock Surges
The chip maker’s share gains come amid a broader market rally in China
- Cambricon Technologies cautioned about trading risks after its stock price surged, surpassing industry peers and major indexes.
- The company clarified it has no plans for new products.
- Analysts are cautious about the frenzy over Cambricon and China’s ambition to produce AI chips at home due to manufacturing hurdles.
Chinese artificial-intelligence chip maker Cambricon Technologies 688256 -9.20%decrease; red down pointing triangle issued a warning about trading risks after a surge in its stock price over the past month.
The company’s stock gains have exceeded that of most of its industry peers and major indexes, the Beijing-based company said in an exchange filing late Thursday.
There is a risk that the stock price may have deviated from current fundamentals, as its current price-to-earnings ratio is over 5000 times, far exceeding the industry level, the company said.
Cambricon’s Shanghai-listed stock fell 5.6% as of midday on Friday after the warning. Despite the decline, its shares have more than doubled over the past month and have overtaken liquor maker Kweichow Moutai as China’s most valuable stock.
Cambricon’s rise comes amid a broader market rally in China, with the benchmark Shanghai Composite Index gaining over 6% over the past month and notching a 10-year high earlier this month.
China’s AI push and drive to make chips locally have given the AI chip designer another push as domestic investors shift their focus to AI infrastructure names.
Another catalyst behind the stock’s gains was Goldman Sachs raising its target price on Cambricon by 50% over the weekend to 1,835.00 yuan.
Cambricon also clarified Thursday that it doesn’t have plans to launch new products.
Chinese demand for AI inferencing has been rising after the launch of local foundation models such as DeepSeek, while domestic clients are diversifying their channels for obtaining chips amid tariff uncertainty and data-security concerns.
DeepSeek said last week that its new model uses a new format designed for next-generation homegrown chips, indicating a potential breakthrough in Chinese AI hardware. Markets have speculated that the latest AI chip could come from Cambricon.
Cambricon expects its 2025 revenue to be between 5 billion yuan, equivalent to $701.2 million, and 7 billion yuan, after its first-half revenue grew roughly 44-fold to 2.88 billion yuan.
Some analysts are cautious about the frenzy over Cambricon and China’s ambition to produce AI chips at home.
Cambricon, as a fabless chip maker, can’t turn into TSMC, the world’s largest contract chip maker overnight, said Morningstar analyst Phelix Lee. Meanwhile, SMIC, China’s largest chip maker, still has very low yields in manufacturing advanced chips, Lee added.