Goldman Sachs Scrambles to Follow China’s Red-Hot Cambricon as the AI Chipmaker Surges

Goldman Sachs Scrambles to Follow China’s Red-Hot Cambricon as the AI Chipmaker Surges

When it comes to AI chipmakers, one name is making waves in China’s tech scene, and that’s Cambricon Technologies, also known by its local name Hanwuji. The company, a fabless designer of AI chips, has seen its stock price skyrocket by an astonishing 130% in just a matter of weeks. In an era dominated by big names like NVIDIA and AMD, Cambricon’s rise has been nothing short of dramatic, but behind the impressive numbers lies a deeper risk that could affect its long-term prospects.

Cambricon, at the height of its business troubles, was once dubbed the “king of losses” in China, with cumulative losses close to 5 billion yuan (around $970 million) by the end of 2024. Its fortunes were in the dumps, especially after the US Commerce Department included the company in its Entities List back in 2022, which led to a significant downturn in its operations. But in a strange twist of fate, the US government’s restrictions on exporting advanced AI chips to China, most notably the measures against NVIDIA and AMD that came in April 2025, ended up becoming a blessing in disguise for Cambricon.

The US export restrictions effectively blocked leading Western chipmakers from selling their top-tier AI GPUs in China, creating a market vacuum that Cambricon eagerly rushed to fill. With little competition in the high-performance AI chip sector, Cambricon’s business began to flourish, and the company’s revenue surged by a mind-boggling 4,348% to $402 million during the first half of 2025 alone. This hyper-growth phase has lifted Cambricon’s market capitalization to an eye-watering $90 billion, putting it on par with industry heavyweights like SK Hynix, despite its revenue being a mere fraction (just 1.4%) of the South Korean giant’s earnings.

One of the most impressive aspects of Cambricon’s new AI chip, the Siyuan 590, is its performance. The chip delivers around 90% of the power of NVIDIA’s A100 GPU, with a theoretical peak performance (TPP) of 4,493, compared to 4,992 for the A100. This makes it a formidable competitor, even in the highly competitive world of AI chips. But while Cambricon’s future prospects appear bright, its journey is far from risk-free.

Goldman Sachs, which has repeatedly raised its target price for Cambricon shares, has pegged the stock at 2,104 RMB, marking a significant increase in its projections. However, the company faces a major hurdle in the form of customer concentration. Nearly 80% of its revenue comes from a single customer – ByteDance, the parent company of TikTok. This reliance on one major player exposes Cambricon to significant risks should ByteDance decide to scale back its investments in the AI chipmaker.

Moreover, while Cambricon’s rise is impressive, it’s not the only player in the Chinese AI GPU market. Giants like Huawei and Alibaba, with virtually unlimited financial resources, are also heavily invested in AI chips, adding further competition to Cambricon’s business.

Despite these risks, Goldman Sachs is bullish on Cambricon, and the company’s meteoric rise seems to be on track. While its stock price is bubbly and may face setbacks in the long run, the company’s performance during this hyper-growth phase has earned it a place in the global spotlight. Only time will tell if Cambricon can sustain this level of growth and fend off the competition from both domestic and international chipmakers. Nevertheless, with its market capitalization already reaching unprecedented heights, Cambricon’s journey is one to watch closely.