The dawn of the intelligent agent era is rapidly elevating the status of CPUs, long a supporting player in the computing power hierarchy, within the industry.
International investment bank Bernstein's significant research report has substantially raised its forecast for the global server CPU market and has given a strong endorsement, setting a 450 yuan price target for Hygon Information Technology Co.,Ltd. (ASX: 688041). Amid the market fervor, the debate now centers on whether the company, with its market capitalization now exceeding 760 billion yuan, can achieve further breakthroughs.
The stock price of CPU giant Hygon Information Technology Co.,Ltd. (ASX: 688041) has once again been propelled to a high level by various capital forces, pushing its total market value past 760 billion yuan.
On June 18th, Hygon's shares closed up 6.42% at 328 yuan per share, bringing its total market capitalization to 762.4 billion yuan. Year-to-date, the stock has gained 46.21%, with a weekly increase of 17.14% this week alone.
A catalyst for this rally appears to be a recent in-depth report from Bernstein. The report suggests that the industrial importance of CPUs is gradually increasing amid the wave of intelligent agents, potentially leading to significant market expansion globally.
Bernstein has revised its 2030 global server CPU market size forecast sharply upward from 137 billion USD to 223 billion USD. Concurrently, it assigned Hygon a target price of 450 yuan, implying a potential upside of approximately 35% from current levels.
Compounded by signals of tightening CPU supply from the recent Computex Taipei exhibition, positive industry catalysts are materializing. The key question now captivating capital markets is whether Hygon, with its market cap back above the 760 billion yuan mark, can ride this wave to new heights.
450 Yuan Price Target
On June 18th, Hygon Information Technology Co.,Ltd. (ASX: 688041) surged 6.42% to close at 328 yuan per share, achieving a total market capitalization of 762.4 billion yuan. Over a longer timeframe, the stock has gained 46.21% year-to-date, with a 17.14% rise this week.
Bernstein published a deep-dive report on June 17th, with its core thesis being that in the era of intelligent agents, the role of CPUs in data centers is shifting from a traditional supporting role to a leading one.
During the rise of large language models, GPUs were central to AI computation, with overseas tech giants' AI servers maintaining a GPU-to-CPU ratio as high as 8:1. However, entering the intelligent agent era, CPUs are responsible for efficiently orchestrating the entire system workflow; insufficient CPU performance can directly lead to idle GPU computing power. Based on this assessment, Bernstein projects that by 2029, the GPU-to-CPU ratio in cloud service providers' inference clusters will drop to 1:1.
This opens up significant market space for CPUs. Bernstein has raised its estimate for the total addressable market for CPUs in 2030 from 137 billion USD to 223 billion USD. As a leading domestic player in the x86 CPU field, Hygon stands to benefit directly from this industry trend. Bernstein's 450 yuan target price suggests over 35% potential upside from the current share price.
The bullish sentiment from sell-side institutions is not isolated, with signals from the industry providing concurrent validation. At the recently concluded Computex 2026 Taipei computer show, Intel's CEO stated that in recent weeks, several global tech CEOs have personally called to expedite shipments, indicating server CPU supply constraints far exceeding expectations. An Intel vice president also revealed that a leading domestic large model manufacturer had increased its server CPU procurement volume fivefold over the past year.
Riding this industry wave, Hygon, as the most commercially mature player in the domestic CPU sector, is already delivering on its financial performance. In 2025, the company achieved revenue of 14.377 billion yuan, a year-on-year increase of 56.92%, and net profit attributable to shareholders of 2.545 billion yuan, up 31.79%. This strong growth momentum continued into Q1 2026, with revenue up 68.06% year-on-year and net profit up 35.82%.
Behind the substantial market cap increase, shareholder actions show some divergence. Notably, the widow of Chifeng Gold's founder, who entered the top ten shareholders in Q3 2024, has seen the value of her holdings nearly double from 6.789 billion yuan to 13.821 billion yuan by the end of Q1 2026. Based on the latest trading price, her holdings are now valued over 20 billion yuan, representing paper gains exceeding 7.5 billion yuan in just a few months.
Conversely, the company's internal employee shareholding platform has begun taking profits. In April this year, Hygon announced the completion of a share reduction by the employee platform, which sold a total of 11.62 million shares via block trades, amounting to approximately 2.715 billion yuan. This marks the first instance of an employee shareholding platform reducing its stake since the company's listing.
Dawning Information Industry Co., Ltd.'s Stake
Hygon's stellar performance has also refocused market attention on its largest shareholder, Dawning Information Industry Co., Ltd.
Hygon's inception was a strategic move by Dawning. In 2014, when the domestic high-end server chip market was almost entirely monopolized by foreign manufacturers, domestic server makers faced significant supply chain risks. It was against this backdrop that Dawning, in collaboration with the Institute of Computing Technology of the Chinese Academy of Sciences and Tianjin Haitai, jointly established Hygon to break the technological gap in domestic x86 architecture CPUs.
From the beginning, Dawning has maintained its position as the largest shareholder. Since Hygon's IPO, Dawning's total shareholding has remained at 650 million shares, representing a 27.96% stake.
Interestingly, on Hygon's first day of trading on the STAR Market in August 2022, the market value of Dawning's stake was nearly 39 billion yuan. By the end of Q1 2026, as Hygon's share price surpassed 300 yuan, the value of this stake had skyrocketed to approximately 136.648 billion yuan, a gain of about 250% in less than four years. As of the close on June 18th, Dawning's own total market capitalization was less than 130 billion yuan, creating the rare phenomenon of a "subsidiary's stake value exceeding the parent company's total market cap."
Beyond the equity relationship, the two companies are deeply intertwined in business. As a leading domestic server and computing power solutions provider, Dawning is a major downstream customer for Hygon. Financial reports show that in 2025, sales to Hygon's largest related party reached 8.149 billion yuan, accounting for over 56.68% of its revenue. Cross-referencing with public information indicates this related party is Dawning.
In addition to business synergy, the management teams of the two companies are closely connected. Dawning's Chairman and General Manager also serves as a director at Hygon. Hygon's current Director and General Manager previously held positions as Technical Vice President and Senior Vice President at Dawning from 2011 to 2020. Furthermore, Hygon's current CFO and Board Secretary previously served as Vice President and Board Secretary at Dawning.
Perhaps due to this high level of integration, in May of last year, Hygon announced a plan to merge with its parent company, Dawning, via a share swap. According to the restructuring proposal, the exchange ratio was set at 0.5525 Hygon shares for each Dawning share, with the total transaction value reaching approximately 115.969 billion yuan.
This announcement immediately garnered widespread attention in the A-share market. As the first major asset restructuring case on the STAR Market involving a "subsidiary absorbing the parent," this move was widely interpreted by the market as an integration of computing power assets within the "CAS" system. If completed, the transaction would create a trillion-yuan computing power giant covering the entire chain from chips to complete machines.
However, after nearly seven months of progress, in December 2025, both companies simultaneously announced the termination of the major asset restructuring. The stated reason was "the large scale of this transaction, the numerous parties involved, significant changes in the market environment since the initial planning stage, and the conditions for implementing the transaction not yet being mature."
The market generally believes that the continuous rise in Hygon's share price during the restructuring period, which widened the valuation gap with Dawning, leading to an imbalance in the originally set exchange ratio, was likely a primary factor in the termination.
Assessing the Valuation
As Hygon's market capitalization once again surpasses 760 billion yuan, debates over its high valuation continue to intensify.
As the market cap leader in the domestic CPU sector, Hygon has followed a development path of leveraging external technology. Amid an industry landscape where high-end chips were dominated by foreign companies, Hygon secured a technology licensing agreement with AMD, obtaining authorization for the first-generation Zen architecture, allowing rapid entry into the x86 ecosystem. In 2018, Hygon's first-generation CPU was successfully mass-produced. This approach allowed the company to bypass a lengthy cold-start period and achieve commercial implementation quickly.
In June 2019, Hygon was added to the U.S. Department of Commerce's Entity List, after which AMD ceased subsequent technical and service support. This external supply cut ironically accelerated the company's journey towards self-reliance, leading to the subsequent launch of its second, third, and fourth-generation product series. By the time of its STAR Market IPO in 2022, the company was already generating annual revenue of 5.125 billion yuan.
In contrast, Loongson Technology, the "first domestic CPU stock" which listed on the STAR Market earlier than Hygon, reported revenue of only 739 million yuan for the same period, a significant gap. Although Loongson, also part of the CAS ecosystem, was founded much earlier than Hygon, its choice of a proprietary instruction set architecture, requiring ecosystem development from scratch and involving long investment cycles, has resulted in relatively modest fundamental performance.
Another CPU company, Phytium Technology, an associate of China Great Wall, follows the ARM architecture path. With relatively good compatibility, its 2022 revenue performance was slightly better than Loongson's at 1.630 billion yuan.
By 2025, the performance gap among the three had widened further. Hygon achieved annual revenue exceeding 14 billion yuan, with further growth expected in 2026. In comparison, Loongson and Phytium reported revenues of only 635 million yuan and 2.534 billion yuan, respectively, for the same period, showing slight increases from 2022 but far from matching Hygon's growth trajectory.
The gap in net profit is even more pronounced. In 2025, Hygon's consolidated net profit reached 3.619 billion yuan, while Loongson remained in a loss-making phase, reporting an annual loss of 455 million yuan for 2025. Phytium achieved only a modest profit of 79 million yuan.
Technological pathways and commercialization cycles are major factors driving this divergence and are key reasons capital favors Hygon. From a valuation perspective, Hygon does not currently appear excessively overvalued. Its current trailing price-to-sales ratio is 47.62x, which offers considerable room for appreciation compared to Loongson's 91.04x. On a price-to-book basis, Hygon's ratio is slightly higher than Loongson's (32.45x vs. 24.49x).
Policy-driven demand from the domestic IT substitution initiative also provides clear growth certainty for Hygon. A policy document issued in September 2022 mandates the completion of IT system substitution within central state-owned enterprises by the end of 2027. Research from Changjiang Securities notes that Hygon's high-end CPUs, with their x86 ecosystem compatibility and performance advantages, firmly occupy the top tier in the domestic IT substitution CPU field and are poised to benefit significantly from this wave of replacement.
Bernstein's report further points out that the explosion of China's AI computing power, which is exceeding the global average industry growth rate, is likely to further elevate Hygon's valuation. The report forecasts its 2027 price-to-earnings ratio to reach 71x, significantly higher than AMD's 45x and Intel's 20x.
Amid the AI computing power wave, the ultimate trajectory of Hygon's current rally remains a question for the market to answer.
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