At the end of August, the stock price of Chinese AI chip company Cambricon Technologies exceeded Moutai Group, a famous liquor maker in China, twice. There have been instances in the A-share market history where companies that surpassed Moutai’s stock price experienced sharp declines, leading to heightened attention on whether Cambricon can break the “Moutai curse”.
On August 29th, Cambricon’s closing price was 1,492.49 yuan, surpassing Moutai’s 1,480 yuan. The previous day, Cambricon closed at 1,587.91 yuan, surpassing Moutai’s 1,446 yuan, but then swiftly dropped below Moutai. The following day, Cambricon reclaimed the top position.
However, comparing the two days, Cambricon’s stock price dropped by 6% from the previous trading day while Moutai rose by 2.35%.
From the beginning of the year until August, Cambricon’s stock price has surged by 143%, with nearly a 130% increase in August alone. Over the past 12 months, Cambricon has seen a nearly 600% increase in stock price.
Cambricon went public on China’s Shanghai Stock Exchange Sci-Tech Innovation Board on July 20, 2020, at an IPO price of only 64.39 yuan per share. Since then, the stock has skyrocketed by 2,317% from its IPO price.
The company’s semi-annual report for the first half of 2025 showed a revenue of 2.881 billion yuan, a 4348% year-on-year increase, and a net profit of 1.038 billion yuan, a 296% year-on-year increase.
After a rapid surge in stock price, Cambricon issued a risk warning announcement through the Shanghai Stock Exchange on the evening of August 28th, officially cautioning investors that the stock price has significantly deviated from the fundamentals.
In the A-share market, there’s a phenomenon known as the “Moutai curse.” Historically, stocks like China Shipbuilding, Hikvision, Baofeng Technology, and QuanTong Education experienced significant declines after surpassing Moutai, hence the notion of the “Moutai curse.”
Cambricon being seen as the “Nvidia of China” faces skepticism on whether it can maintain its top position and break the “Moutai curse.”
Multiple analysts point out that Cambricon is highly overvalued with metrics like trailing P/E, forward P/E, and P/B ratios far exceeding industry averages, indicating overvaluation risks.
As of the closing on August 28th, Cambricon’s trailing P/E ratio hit a staggering 5,117.75x, with the lowest P/E ratio at 1,687.21x, compared to the historical average of 2,317.43. The company’s industry average trailing P/E ratio is 88.97x, showing an extreme overvaluation for Cambricon.
This suggests that for the coming years, Cambricon must sustain a high growth rate to justify its current valuation levels.
In contrast, Nvidia’s current P/E ratio stands at 49.55, making Cambricon’s average P/E ratio 46 times that of Nvidia.
In terms of market capitalization, Cambricon’s market value is around three-quarters of Intel’s, a chip giant, despite only generating 1.6% of Intel’s revenue.
According to Bernstein, Cambricon holds a 1% market share in China’s AI chip market as of 2024, ranking fourth after Nvidia’s 66%.
From various indicators, it’s evident that Cambricon’s stock price is significantly overvalued.
Analysts from Donghai Securities attribute Cambricon’s soaring revenue and profits to the increasing demand for computing power in China and the scarcity of domestic cloud AI chips.
With the background of US restrictions on AI chips to China, the difficulty for Nvidia to access the market, and the risk of supply disruption, Cambricon stands as a scarce domestic alternative, a significant factor in its popularity.
Bernstein estimates that China’s domestication rate of AI chips will rise from 17% in 2023 to 55% in 2027, potentially benefiting companies like Cambricon.
Moreover, the release of the “Artificial Intelligence + Action Plan” by the Chinese government in August 2025 provided policy incentives for companies like Cambricon.
Established in March 2016, Cambricon is a young chip company that has been in operation for less than a decade.
Since its founding, Cambricon has been plagued by losses. From 2017 to 2019, the company reported negative net profits totaling around 54.18 billion yuan over eight years.
Cambricon just achieved its first half-year profit two days ago. According to its semi-annual report released on August 26th, the company saw a revenue increase of 4347.82% year-on-year and turned its net loss of the same period last year into a net profit.
Commentators warn that Cambricon’s stock price should avoid rapid and unsustainable surges to prevent potential negative impacts on the Chinese economy and investor confidence.
The history of the “Moutai curse” serves as a reminder that without sustained growth to support extremely high valuations, the risk of maintaining such valuations is challenging. The company itself issued warnings to investors regarding the risk of stock prices deviating significantly from fundamentals.