The most outstanding AI stock is in India.

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The world’s most jaw-dropping stock is not from Silicon Valley, but appears in the Indian market.

RRP Semiconductor Ltd.’s share price soared more than 55,000% in 20 months through December 17—even though the company has negative revenue and only tenuous real links to the semiconductor sector.

This astonishing surge has attracted intense attention from regulators. Sources told Bloomberg that the Securities and Exchange Board of India (SEBI) has initiated an investigation into whether there was any improper conduct behind RRP’s skyrocketing share price. Since peaking on November 7, the stock has dropped 6%, and the exchange now limits it to trading only once a week.

RRP’s meteoric rise highlights major challenges for regulators in shielding retail investors from speculative manias. Especially in the Indian market, the scarcity of listed chipmakers has left retail investors eager for anything that offers a piece of the global AI boom—fueling irrational exuberance.

This world-beating stock is turning into a cautionary tale about chasing the risks of the AI bubble. Although the company’s moves are unlikely to affect the broad rally of global giants like Nvidia Corp., it reveals just how extreme and disconnected from fundamentals returns have become in specific corners of the market.

Negative Revenue and Two Full-Time Employees

Despite the stock’s explosive rise, RRP’s fundamentals are extremely weak. According to the latest annual report, the company has only two full-time employees. More worryingly, in the quarter ending September, the company posted negative revenue of 68.2 million rupees and a net loss of 71.5 million rupees.

The negative revenue arose because the company reversed previously booked sales from the prior three months. Bloomberg reported this was from a 4.4-billion-rupee order last November from Telecrown Infratech Pvt., which was later cancelled due to “contractual disagreements.”

Yet, it was this sort of company—buoyed by online hype, extremely low free float, and India’s expanding retail investor base—that hit the upper daily price limit for 149 consecutive trading days. Until recently, RRP was virtually unknown in its home market of India, but now is becoming a frenzy on social media.

The “Semiconductor Transformation” Narrative Bubble

RRP Semiconductor’s transformation began in early 2024. Rajendra Chodankar took over the real estate firm G D Trading and Agencies Ltd. and renamed it RRP Semiconductor. Chodankar’s previous background included providing niche products like thermal imaging systems.

Despite the new name and enthusiasm, in a November 3 exchange filing, the company admitted it “has not begun any form of semiconductor manufacturing activity,” nor has it applied under any government incentive program.

Investor excitement over the stock largely stems from confusion about the relationship between the listed entity and another private company, RRP Electronics Pvt., owned by Chodankar. RRP Electronics had announced plans to set up a semiconductor assembly and testing facility in Maharashtra, and hosted a high-profile event attended by politicians and cricket legend Sachin Tendulkar.

Although the listed company includes RRP Electronics as a related party, it does not directly hold any of its shares.

Highly Concentrated Shareholding and Regulatory Loopholes

This frenzy has concealed the extremely low liquidity risk of the stock. According to BSE and Ministry of Corporate Affairs filings, around 98% of shares are held by Chodankar and his close circle, who also appear as related parties in other RRP Group companies.

Problems at the regulatory level have also surfaced. A BSE insider said the exchange suffered an “internal error” in processing the company’s share issuance. SEBI had already warned in September 2024 that because the company belongs to the founder group of Shree Vindhya Paper Mills—which was delisted for violations in 2017 and faces a 10-year market ban—RRP should have been barred from entering the securities market. BSE may now seek SEBI’s guidance to extend the share lock-up period, pending legal appeals.

RRP Electronics declined to comment on Bloomberg’s inquiries regarding the share price rally and regulatory measures, citing ongoing legal appeals.

Blind Chasing Fueled by Lack of Options

RRP’s case reflects India’s intense hunger for chip stocks. Sonam Srivastava, founder of Wryght Research & Capital Pvt., said: “Semiconductors are extremely popular, and given the limited options in India, people are willing to buy anything related to the sector.”

Concerns over AI valuations are spreading globally, and exchanges and chipmakers across Asia are warning investors not to pursue overheated trades. As the AI fever cools and regulatory scrutiny increases, RRP—a company driven by narrative—is facing a stern test, with the main downside risks borne by those retail investors who rushed in at the highs.

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