Intro: Cambricon’s stock surge signals China’s AI-led growth push and policy momentum, but upside hinges on execution, market adoption, and stable external factors.

Cambricon’s Siyuan 690 chip is being positioned to rival Nvidia’s H100 amid U.S. export controls, backed by a 5 billion yuan capital raise to accelerate large‑model chip development and software ecosystems.

In H1 2025, Cambricon posted a record net profit of 1.03 billion yuan and revenue of 2.9 billion yuan, reversing a 533 million yuan loss from a year earlier and showing 44‑fold sales growth.

The DeepSeek model launch and related demand have heightened interest in Cambricon as a supplier to domestic AI models and infrastructure.

Investor sentiment strengthened as China prioritizes domestic tech, with Cambricon’s market value roughly doubling to about $80 billion in a single month.

Analysts advise hedged exposure and diversification into mature peers, adopting a cautious stance amid short‑term volatility despite long‑term AI semiconductor demand.

Cambricon expanded support for domestic models like DeepSeek, Alibaba’s Qwen, and Tencent’s Hunyuan, while announcing a 4 billion yuan private placement to fund its large‑model chip platform.

Three factors driving a broader market re‑rating are geopolitical tailwinds from sanctions, surging AI infrastructure demand, and policy support through Made in China initiatives and state funding.

Beijing’s encouragement of domestically produced technology appears to underpin Cambricon’s strong performance.

Valuation shows tension: extreme growth optimism versus fundamentals, with high price‑to‑book multiples and questions about a mature software ecosystem and domestic foundry reliance.

Analysts credit government support as a key growth driver for Cambricon amid restrictions on China’s AI sector, highlighting the shift to homegrown solutions.

Strategic takeaway for investors: high risk–high reward, hinging on Siyuan 690’s performance, potential valuation correction, and the impact of geopolitical or policy changes.