Goldman Sachs has increased the target price for Cambricon Technologies by 50%, setting it at CNY 1,835, up from the current share price of CNY 1,243. Three main drivers are cited for this upgrade: increased capital spending by Chinese cloud companies like Tencent, a wider range of chipset platforms including developments such as DeepSeek 3.1, and ongoing research and development investments.
Cambricon Technologies, based in Beijing, was founded in 2016 as a spin-off from the Chinese Academy of Sciences. The semiconductor firm, partially state-owned, focuses on designing AI processors and GPGPUs that are utilised in deep learning applications across different sectors, including cloud servers, edge devices, and intelligent terminals, earning it the nickname “China’s Nvidia.”
Trading Strategy
Given the new CNY 1,835 price target for Cambricon, we see this as a strong bullish signal for the coming weeks. Traders should consider buying call options with strike prices below the new target, perhaps in the CNY 1,500 to CNY 1,600 range. This strategy positions for a significant upward move while capping the initial risk.
This upgrade will likely increase the stock’s implied volatility, making options more expensive. We should therefore also look at bull call spreads to offset the rising premium costs. This involves buying a call option at a lower strike price and simultaneously selling one at a higher strike price to finance the position.
The confidence in this move is backed by recent data from China’s MIIT, which reported a 22% year-over-year increase in cloud infrastructure spending for the second quarter of 2025. This directly confirms the rising capital expenditure from key Cambricon clients like Tencent. It shows the demand for domestic AI hardware is accelerating as we expected.
Furthermore, this sentiment aligns with Cambricon’s recent successful performance benchmarks for its new MLU 500 series chip, released earlier this year. The chip has shown a 30% performance gain over its predecessor in large language model training, supporting the view that its R&D investments are paying off. This provides a fundamental reason for the stock to re-rate higher.
Policy Support
We are viewing this as a direct result of the push for technological self-sufficiency that intensified after the US chip restrictions of the early 2020s. Cambricon, as a state-backed champion, is capturing the market share that was previously inaccessible. This long-term policy support creates a solid foundation for the stock’s momentum.
This pattern is very familiar to us, as it echoes the analyst upgrades that preceded major rallies for Nvidia back in 2023 and 2024. The combination of a strong AI narrative, tangible technological progress, and increasing cloud demand creates a powerful catalyst. We anticipate that a similar upward trend could materialize for “China’s Nvidia” in the near future.
