The STAR Market's first trillion-yuan stock: What makes Cambricon stand out?

``` The STAR Market welcomes its first stock with a trillion-yuan market capitalization. On June 30, during trading hours, shares of Cambricon, the leading A-share computing chip company, surged more than 8%, pushing its total market capitalization past one trillion yuan. This milestone marks both a historic moment for the STAR Market and Cambricon’s transformation from continued losses after its IPO to joining the ranks of China’s largest listed companies. By the close of the midday session, Cambricon was priced at 1,613 yuan per share, up 8.84%, surpassing Morgan Stanley’s base case target price of 1,528 yuan. Its total market capitalization reached 1.01 trillion yuan, ranking ninth in A shares, just behind Kweichow Moutai. Calculated at the closing price at the end of 2025, the stock’s gain year-to-date is 77%. If calculated from the 2025 July low of 348 yuan, the cumulative eleven-month increase is a staggering 363%. The achievement of a trillion-yuan market cap is built upon profound improvements in performance. In the first quarter of 2026, the company achieved single-quarter revenue of 2.885 billion yuan, up 159.56% year-on-year; net profit attributable to shareholders was 1.013 billion yuan, up 185.04% year-on-year; and net profit excluding non-recurring items soared 238.56% year-on-year. Multiple indicators far exceeded market expectations. Contract liabilities increased nearly 400 million yuan in the quarter, indicating that major internet company orders are entering a peak delivery period, and actual realization of commercial client demand has become the market’s most closely watched forward-looking signal. Goldman Sachs has set a target price of 2,406 yuan, based on the core logic of the continual expansion of domestic AI chip market share. However, a dynamic P/E ratio of approximately 373 times has intensified valuation debate—whether high growth can ultimately be realized remains the biggest suspense hanging over the trillion-yuan valuation. 363% in eleven months: The leap from 20 billion to 1 trillion A year ago, this would have seemed almost unimaginable. At the same time in 2025, Cambricon’s share price was hovering around 300 yuan, with a total market cap of about 20 billion yuan, and the market was widely uncertain about its profitability sustainability. The turning point came in the second half of 2025. As the Siyuan chip series was adopted at scale by internet giants like ByteDance, Alibaba Cloud, and Tencent Cloud, order volumes rapidly climbed and the stock price entered an uptrend. After the 2025 annual report disclosed the company’s first-ever full-year profit, market confidence surged, and the share price began a new round of increases around 900 yuan at the start of this year. After the April 28th Q1 earnings release, the stock continued a choppy upward trend. On June 18, driven by rising demand expectations, Cambricon jumped 21% in a single day, its market cap rising to 947.1 billion yuan—nearly breaching the trillion mark. After a short adjustment, the stock price broke through during trading on June 30, setting a new record for STAR Market listed companies. This milestone comes exactly six years after the company went public. Cambricon listed on the STAR Market in July 2020 as the “world’s first AI chip stock,” with an IPO price of 64.39 yuan and jumped 229% on its debut. However, performance quickly soured, not seeing a fundamental inflection point until 2025. From 64.39 yuan to 1,613 yuan, 20 billion to 1 trillion in market cap—Cambricon has undergone its most profound value reassessment since its IPO. Performance inflection: From loss quagmire to economy of scale The fundamental driver behind Cambricon’s re-rating is structural improvement in its fundamentals. From 2020 to 2024, revenues were 459 million, 721 million, 729 million, 709 million, and 1.174 billion yuan, while net losses attributable to shareholders expanded from 435 million yuan to 1.257 billion in 2022, with a 2024 net loss of 452 million; the company accrued over 3.8 billion yuan in losses over five years. In 2025, revenue reached 6.497 billion yuan and net profit attributable to shareholders was 2.059 billion yuan, officially ending the streak of continual losses. Moving into 2026, the growth momentum further accelerated. The Q1 report shows net profit excluding non-recurring items at 934 million yuan, up 238.56% year-on-year, with profit growth significantly outpacing revenue growth, indicating economies of scale. Net operating cash flow for Q1 was 834 million yuan, turning positive year-on-year, meaning its core business no longer relies on external financing. The company also launched its first dividend plan since listing, proposing to distribute 15 yuan in cash dividends (tax included) for every 10 shares, and an additional 4.9 bonus shares for every 10 shares. In total, 632 million yuan will be distributed in cash dividends, reflecting management confidence in profitability sustainability. Demand is also providing robust support. According to Goldman Sachs quoting IDC data, China’s AI chip shipments in 2025 are projected to increase 47% Y/Y to 4 million pieces, with the share of domestic chips rising from 30% in 2024 to 41% in 2025. Goldman notes Cambricon is China’s largest third-party AI chip supplier after Huawei, Alibaba (T-Head), and Baidu (Kunlun)—all with their own cloud platforms—and is a direct beneficiary of this market share expansion. Wall Street endorsement: Goldman Sachs and Morgan Stanley raise targets International investment banks have issued highly consistent outlooks on Cambricon, generally ahead of broader market expectations. In its May report, Goldman Sachs raised Cambricon’s target price from 2,104 yuan to 2,406 yuan and maintained a Buy rating. The rationale: Q1 revenue was 2.9 billion yuan, a quarter-on-quarter increase of 53%, 61% higher than Goldman’s prior estimates; EBITDA margin jumped from 26% to 42%; contract liabilities soared from about 6,000 yuan at the end of last quarter to 396 million yuan at the end of Q1, indicating a full order book and high inventories of 4.5 billion yuan reflecting robust demand. Consequently, Goldman raised its 2026–2030 net profit forecasts by 68%, 30%, 42%, 45%, and 43%, respectively. Morgan Stanley, in its June 22 report, raised its target price from 1,342.28 yuan to 1,528 yuan and maintained an Overweight rating. The bank raised its estimated 2030 China AI chips total addressable market (TAM) from $67 billion to $91 billion, a 36% increase, projecting a CAGR of 23% for 2025–2030. For Cambricon, Morgan Stanley is optimistic about the company’s stable supply chain via SMIC’s foundries and the product upgrades to come from MLU690 chip mass production in the second half of 2026, and accordingly lifted its 2026–2028 revenue forecasts by 6% to 10% and EPS estimates by 5% to 12%. Notably, Morgan Stanley’s target price of 1,528 yuan is significantly higher than the market consensus average of 1,116.51 yuan, with 88% of institutions giving an overweight rating and none recommending a sell. The Valuation Debate: Is a 373x P/E Ratio Sustainable? The one trillion yuan market cap immediately brings a sharp question into focus: is this valuation reasonable? At the current stock price, Cambricon’s dynamic price-to-earnings ratio (TTM) is about 373, not only far above the global semiconductor industry average but also much higher than leading overseas AI chip companies like Nvidia and AMD. Morgan Stanley’s scenario valuation model makes this divergence clear: the optimistic-case target price is 2,887 yuan, while the pessimistic case is 770 yuan—a nearly fourfold difference—highlighting the market’s great uncertainty over the company’s fundamentals going forward. Bulls argue that high valuation reflects high growth expectations. Morgan Stanley projects that Cambricon’s revenue CAGR will exceed 100% in 2026–2028. If net profit reaches about 12.2 billion yuan in 2027, the P/E ratio would rapidly fall to about 80x at the current stock price. Adding the long-term potential of domestic chips, the present valuation is still supportable. Cautious voices point out that the company’s customers are concentrated among a few major cloud companies—ByteDance, Alibaba, Tencent, and Baidu—who have strong bargaining power, so a single client’s order fluctuations could significantly impact performance. The AI chip industry evolves rapidly and is highly competitive and cyclical, and if wafer capacity and yields remain constrained, shipments may disappoint. Morgan Stanley also warns in its research that if chip iteration lags the industry or a price war intensifies, gross margins could come under pressure, possibly resulting in both earnings and valuation declines. Risk Disclaimer: The market involves risks, and investment should be cautious. This article does not constitute individual investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Investors should assess whether any opinions, views, or conclusions herein are suitable for their situation. Investment decisions are at your own risk. ```