Cambricon at 348 Times Earnings
The profitability question is settled. The valuation question is just getting started.
Editor’s Note: FlashPoint is our premium quick-strike column on market-moving China tech events. Today: Cambricon’s Q1 2026 earnings and what the stock price is actually pricing. In August 2025, I analyzed the company’s dramatic financial turnaround and flagged the structural risks beneath the profit surge. Eight months later, the earnings keep accelerating. So do the risks.
Cambricon Technologies, China’s most visible listed domestic AI-chip company, reported first-quarter revenue of Rmb2.88bn, up 160 per cent year on year. Net profit reached Rmb1.01bn, a 185 per cent increase. Operating cash flow came in at Rmb834mn, compared with a negative Rmb1.4bn a year earlier.
The scale of the acceleration is worth pausing on. That single quarter of revenue roughly matches what Cambricon booked in the entire first half of 2025. The stock responded accordingly, hitting its daily price limit at Rmb1,700 on April 30, with turnover exceeding Rmb26bn in a single session. Market capitalisation crossed Rmb710bn. On a 2025 earnings base, the stock was trading at roughly 348 times earnings. Even after incorporating Q1, the valuation still implies a multiple above 250 times trailing profit.
Eight months ago, the central question around Cambricon was whether it could make money. That question has been answered. The company turned its first-ever annual profit in 2025 and has kept the momentum going, with Q1 net income more than doubling the Rmb455mn earned in Q4 2025. Gross margins held above 54 per cent. Net profit excluding non-recurring items grew even faster, at 239 per cent, suggesting recurring operations are driving an increasing share of the profit.
At a 2025-earnings multiple of that scale, investors are no longer paying for current profitability. They are pricing an assumption about duration: that China’s AI compute buildout will run long enough, and that Cambricon will capture enough of it, to justify the premium.
