China’s AI chip manufacturer Cambricon (688256.SH) has reported four consecutive quarters of profitability since Q4 2024, with revenue for the first three quarters of 2025 soaring 2386% year-on-year to 4.61 billion yuan and net profit turning positive at 1.61 billion yuan, compared to a loss of 724 million yuan a year e arlier, signaling a strong performance inflection fueled by booming AI demand and accelerated domestic chip substitution.
In Q3 alone, Cambricon’s revenue reached 1.727 billion yuan, a year-on-year increase of 1332.52%, while net profit attributable to the parent company was 567 million yuan, turning around from a loss of 194 million yuan in the same period last year and marking the fourth consecutive profitable quarter. However, compared with its strong performance in Q2, Q3 revenue and net profit fell 2.37% and 16.98% quarter-on-quarter, respectively. In a late August announcement, the company projected full-year 2025 revenue of 5–7 billion yuan.
The chip industry is a technology-intensive sector with long R&D cycles, high intensity, and high costs. Cambricon’s R&D investment has continued to grow, reaching 258 million yuan in Q3, up 22.05% from a year earlier, and 715 million yuan in the first three quarters, up 8.45% year-on-year. Because revenue growth far outpaced R&D investment growth, the proportion of R&D expenditure to revenue in the first three quarters dropped from 455.65% in the same period last year to 15.51%.
Looking at forward-looking revenue indicators, by the end of Q3 2025, Cambricon’s inventory had reached 3.729 billion yuan, representing a 267.33% year-on-year increase and a 38.62% rise from the previous quarter. Prepayments totaled 690 million yuan, down from 830 million yuan at the end of Q2, but still remained at a relatively high level.
Guotai Haitong Securities believes that high inventory reserves and relatively high prepayments may indicate strong future demand for the company’s products, and that the company is currently accelerating stockpiling to ensure future delivery.
Donghai Securities notes that the increase in inventory is partly proactive stockpiling to meet strong downstream demand expectations, and partly to enhance supply chain resilience, ensuring stable delivery of cloud chips and laying a foundation for subsequent revenue growth.
As of the end of Q3, Cambricon’s contract liabilities stood at 80 million yuan, down 463 million yuan from Q2, suggesting that the company fulfilled part of its prior orders during the quarter, and driven by a significant increase in sales collections, the company’s net operating cash outflow for the first three quarters improved markedly to 29 million yuan, compared with 1.81 billion yuan in the same period last year, according to Guosheng Securities.
Cambricon attributes its performance growth in the third-quarter report to the company’s continuous market expansion and active support for the implementation of AI applications, saying that benefiting from the explosion in AI computing demand and the accelerated trend of domestic substitution, Cambricon has reached a performance inflection point.
On one hand, domestic cloud providers are continuously increasing capital expenditure related to AI, and since the beginning of this year, Cambricon has successively received large orders from domestic cloud providers, boosting performance. Cambricon’s largest internet client is ByteDance, which has pre-ordered 200,000 chips from Cambricon.
On the other hand, amid ongoing Sino-US technological tensions, domestic Chinese AI chips are entering an accelerated substitution phase. Since September 2024, the U.S. government has steadily restricted exports of NVIDIA AI chips to China. On July 31, 2025, China’s Cyberspace Administration summoned NVIDIA to provide explanations and evidence regarding potential vulnerabilities and backdoor security risks in its H20 computing chips sold in China. NVIDIA CEO Jensen Huang recently said that the company’s market share in China has fallen from 95% to 0%.
China’s computing centers and cloud providers, based on policy risks and market demand, are turning to domestic AI chips. According to several cloud providers, they would purchase domestic chips to meet heterogeneous computing construction needs. However, domestic AI chip manufacturers currently face capacity constraints and low yield rates. Based on Cambricon’s disclosed maximum full-year revenue, its annual chip shipment would be at most 80,000 units, which may not fully meet the demand of a single large internet cloud provider. Therefore, Cambricon’s top priority is currently to increase production capacity. In addition, after restrictions on NVIDIA’s high-end chips, Huawei’s Ascend series chips have quickly become a strong alternative due to software-hardware integration advantages.
In the secondary market, Cambricon’s stock price has continuously risen since July, even briefly surpassing Kweichow Moutai (600519.SH) in late August, becoming the highest-priced stock in the A-share market. On August 28, Cambricon issued a stock trading risk warning, saying that the stock price had risen more than most peers and significantly exceeded the gains of the Sci-Tech Innovation Index, Sci-Tech 50 Index, and SSE Composite Index, and that the stock price risked detaching from its current fundamentals, posing significant risks to investors.
Following this, Cambricon’s stock price began to fluctuate downward, though its valuation remains significantly higher than the industry level. As of the close on October 22, Cambricon closed at 1,429.50 yuan per share, down 10.43% from the intraday high of 1,595.88 yuan on August 28, though still up 117.30% year-to-date, with a total market value of 602.8 billion yuan; the company’s trailing price-to-earnings ratio (PE, TTM) reached 321.18x, significantly higher than the industry average of 97.63x.
While capital concentration has driven Cambricon’s stock price up, it has also amplified stock price volatility. On September 4, Cambricon plunged 14.45%, partly because multiple ETFs (exchange-traded funds) were set to passively reduce holdings following index weight adjustments, prompting funds to sell ahead of time. The Star Market 50 Index was scheduled for quarterly adjustment after September 12, and as a single sample’s weight cannot exceed 10%, Cambricon’s prior weight of about 15% meant that nearly 10 billion yuan of funds from related Star Market ETFs, managing nearly 200 billion yuan collectively, might be reallocated to other stocks, exerting significant selling pressure on Cambricon.
The third-quarter report shows that Cambricon’s top ten shareholders included four ETFs, holding a total of 4.41%, down from 6.82% at the end of Q2. A-share “whale investor” Zhang Jianping continued to increase holdings by 320,200 shares in Q3. As of the end of Q3, Zhang held a total of 6.4065 million shares, representing 1.53% of total shares, making him the fifth-largest shareholder of Cambricon.
Cambricon recently completed its second private placement since listing. On October 20, Cambricon announced that the final private placement price was 1,195.02 yuan per share, raising a total of approximately 3.985 billion yuan. Of the funds raised, 2.054 billion yuan will be used for large model chip projects, 1.452 billion yuan for large model software projects, and 479 million yuan for working capital. As of the end of Q3, the company had 5.178 billion yuan in cash, up 3.224 billion yuan from the end of Q2.