AI chip design leader Cambricon Technologies Corporation Limited unveiled an explosive first-quarter report for 2026: revenue surged over 159% year-on-year, while net profit jumped more than 185%, signaling sustained improvement in profitability. However, more significant than the impressive figures is the increasingly clear signal of commercial clients taking over as key drivers—contract liabilities surged by nearly 400 million yuan in a single quarter, high inventory levels were digested orderly, and software ecosystem adaptation accelerated. Cambricon's competitive moat is rapidly materializing.
In the first quarter of 2026, Cambricon generated revenue of 2.885 billion yuan, up 159.56% year-on-year and 52.67% quarter-on-quarter. Net profit attributable to shareholders reached 1.013 billion yuan, rising 185.04% year-on-year and 122.89% sequentially. Adjusted net profit stood at 934 million yuan, soaring 238.56% year-on-year, all significantly surpassing market expectations. Bolstered by the robust performance, Cambricon's shares hit the 20% daily limit in afternoon trading on the 30th, approaching 1,700 yuan per share and reclaiming its status as the highest-priced stock on the A-share market, while also driving the STAR 50 Index up over 5%.
Two securities firms maintained "Buy" ratings in their Q1 report analyses on April 30. One team assigned the company a 2026 price-to-earnings ratio of 130, corresponding to a fair value of 1,574.57 yuan per share. The other projected net profits attributable to shareholders for 2026 to 2028 would reach 5.135 billion yuan, 8.403 billion yuan, and 13.741 billion yuan, respectively.
The underlying driver of this earnings surge lies in the accelerating commercialization of domestic AI chips: leading Chinese large language models have achieved Day 0-level adaptation for Cambricon's chips, demand from commercial clients—particularly major internet companies—is progressively converting into firm orders, and economies of scale are becoming significantly evident.
Cambricon's revenue and profit both experienced rapid growth in Q1 2026. Revenue was 2.885 billion yuan, increasing 159.56% year-on-year and 52.67% quarter-on-quarter. Net profit attributable to shareholders was 1.013 billion yuan, up 185.04% year-on-year and 122.89% sequentially. Adjusted net profit was 934 million yuan, a 238.56% year-on-year increase.
Profitability improved concurrently. The Q1 2026 gross margin was 54.33%, remaining broadly stable overall. The net profit margin attributable to shareholders reached 35.13%, higher than the 32.0% recorded in Q1 2025. One analysis indicated that the concentrated delivery of orders from major downstream clients, such as large model developers and internet firms, was the direct catalyst for the accelerated profit realization.
Economies of scale were also notably reflected in the expense structure. Q1 2026 R&D expenses were 324 million yuan, up 18.68% year-on-year, but the R&D expense ratio dropped to 11.23%, a decrease of approximately 13.30 percentage points year-on-year, as revenue growth significantly outpaced expense expansion. Regarding cash flow, net cash flow from operating activities reached 834 million yuan in Q1 2026, an increase of 2.233 billion yuan compared to the same period last year, primarily due to a substantial rise in collections from sales, underscoring the quality of the revenue.
Among all forward-looking indicators, the change in contract liabilities is particularly significant. Contract liabilities surged from 1 million yuan at the end of 2025 to 396 million yuan by the end of Q1 2026, a quarterly increase of approximately 395 million yuan, directly confirming robust downstream demand.
Analysis suggests that Cambricon's AI chips are not only top-tier in performance but have also, through collaborations with internet companies and model developers, jointly established a foundational software ecosystem with domestic AI large models. The report forecasts that sales of the company's AI chips to commercial clients like internet companies are expected to reach a new level in 2026.
Inventory changes also support this assessment. As of the end of March 2026, the book balance of inventory was approximately 4.5 billion yuan, a reduction of about 450 million yuan from the end of 2025, indicating orderly digestion of inventory through product deliveries in the first quarter. Compared to the 2.76 billion yuan recorded at the end of March 2025, inventory increased by approximately 1.74 billion yuan year-on-year, remaining at a relatively high level, which provides strong support for sustained deliveries to commercial clients in subsequent quarters, with delivery volumes potentially increasing gradually.
Positive changes are also evident in the supply chain, with prepayments emerging as another key leading indicator. By the end of March 2026, prepayments stood at 1.9 billion yuan, an increase of 1.15 billion yuan from the end of 2025. Cash paid for goods and services accepted in Q1 2026 was 1.92 billion yuan, up approximately 53.14 million yuan from Q1 2025.
Analysis points out that the significant increases in prepayments and procurement cash outlays validate a trend of steady supply chain improvement and recovery. The company's supply chain advantage is expected to become more pronounced, potentially securing scarce domestic production capacity.
R&D investment continues to intensify. Q1 2026 R&D expenses grew 18.68% year-on-year, with the R&D team expanding steadily. On the hardware front, the company is developing a new-generation intelligent processor microarchitecture and instruction set, focusing on optimizing training and inference scenarios for large language models, video/image generation models, and vertical-specific models. On the software side, efforts continue to adapt and optimize for mainstream large model frameworks, enhancing overall throughput and resource utilization efficiency. Analysis anticipates that the next-generation AI chip products will see significant performance improvements and a more mature software ecosystem, potentially contributing substantial revenue in 2026 and 2027.
The acceleration of software ecosystem development is another crucial dimension of Cambricon's moat. According to a Q1 report analysis, since 2026, Cambricon has achieved Day 0-level adaptation for several major models, meaning chip adaptation was completed on the same day the models were released. Cambricon's foundational software platform, NeuWare, is maturing, offering comprehensive compatibility with the latest community PyTorch versions and the Triton operator development language, supporting rapid migration of user models and custom operators, with leading performance on multiple metrics. The synergistic development of hardware and software is expected to further enhance the company's earnings flexibility and business stickiness.
Analysis reinforces this view from the demand side: domestic downstream clients are expected to procure a significant proportion of AI chips from Cambricon and other domestic suppliers to meet the新增 computing power demand driven by new model applications. Furthermore, breakthroughs in agent-related applications and AI-assisted programming tools are accelerating. Agents consume significantly more tokens than standard large model text generation tasks, indicating a clear upward trend in computing power demand, which benefits pioneers like Cambricon with significant first-mover advantages.
Regarding valuation, one analysis, considering the company's industry position, competitive advantages, downstream demand prospects, and the scarcity of independent third-party platforms, applied a premium relative to comparable companies. Using a 2026 P/E ratio of 130, it derived a fair value of 1,574.57 yuan per share, suggesting approximately 11% upside from the current price (1,416.63 yuan per share), and maintained a "Buy" rating. It forecasts earnings per share for 2026 to 2028 at 12.11 yuan, 21.46 yuan, and 35.55 yuan, respectively, with revenues of 16.46 billion yuan, 27.79 billion yuan, and 44.19 billion yuan.
The other analysis also maintained a "Buy" rating, projecting net profits attributable to shareholders for 2026 to 2028 at 5.135 billion yuan, 8.403 billion yuan, and 13.741 billion yuan, respectively, corresponding to EPS of 12.18 yuan, 19.93 yuan, and 32.58 yuan per share. Its revenue forecasts are 14.603 billion yuan, 23.655 billion yuan, and 36.656 billion yuan for the same periods.
Analysis notes that Cambricon's series of AI chips were among the earliest domestically developed products to achieve commercial deployment and gain a leading edge. This first-mover advantage is expected to create a significant scale barrier, as end-users are unlikely to adopt four or five different AI chip platforms simultaneously. This grants Cambricon a distinct "structural premium" in the domestic AI chip market.
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