Goldman Sachs has raised its target price for Cambricon Technologies by 50%, now setting it at CNY 1,835, up from the current share price of CNY 1,243. Three key factors contributed to this upgrade: increased spending by Chinese cloud companies like Tencent, a broader range of chipset platforms including DeepSeek 3.1, and continuous investments in research and development. Cambricon Technologies, located in Beijing, was established in 2016 as a spin-off from the Chinese Academy of Sciences. This semiconductor firm, partially owned by the government, focuses on designing AI processors and GPGPUs used in deep learning applications across various sectors, such as cloud servers, edge devices, and smart terminals. As a result, it’s often referred to as “China’s Nvidia.”

Trading Strategy

With the new target price of CNY 1,835 for Cambricon, we view this as a strong bullish indicator for the upcoming weeks. Traders might consider buying call options with strike prices below the new target, ideally within the CNY 1,500 to CNY 1,600 range. This approach prepares for a significant upward shift while keeping initial risk low. This upgrade is likely to raise the stock’s implied volatility, which can increase options’ prices. To manage these rising costs, we should also consider bull call spreads. This means buying a call option at a lower strike price and selling one at a higher strike price to help finance the position. Recent data from China’s Ministry of Industry and Information Technology (MIIT) supports our confidence in this move. They reported a 22% year-over-year increase in cloud infrastructure spending for the second quarter of 2025. This trend confirms that spending is rising among key Cambricon clients like Tencent, indicating that demand for domestic AI hardware is growing as we expected. In addition, Cambricon’s recent success with its new MLU 500 series chip, launched earlier this year, strengthens this sentiment. The chip has demonstrated a 30% performance improvement over its predecessor in large language model training, showing that its R&D investments are yielding positive results. This gives strong reasons for the stock to climb higher.

Policy Support

We believe this trend is a direct result of the push for technological self-sufficiency that grew stronger after US chip restrictions in the early 2020s. As a state-supported leader, Cambricon is gaining market share that was once hard to reach. This long-term policy backing provides a solid base for the stock’s momentum. This scenario is quite familiar, as it resembles the analyst upgrades that led to significant rallies for Nvidia in 2023 and 2024. With a strong AI narrative, real technological advancements, and rising cloud demand, we see a powerful catalyst forming. We expect a similar upward trend for “China’s Nvidia” in the near future. Create your live VT Markets account and start trading now.

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