Since its inception in 2016, Cambrian has swiftly ascended to prominence in AI chip technology, leveraging its pioneering status and the research prowess of the Chinese Academy of Sciences. Initially specializing in the design and development of smart chips, the company began with chip IP licensing and gradually diversified its product portfolio to include edge and cloud solutions. Additionally, Cambrian developed a comprehensive software ecosystem from scratch, encompassing the underlying Runtime, the programming language BANG, and an operator library, showcasing robust technical prowess and innovative capabilities.

From 2017 to 2019, Cambrian's revenue demonstrated growth, yet its net profit attributable to shareholders remained in the red, with cumulative losses steadily increasing. Following its public listing in 2020, revenue growth slowed, and losses persisted. Between 2021 and 2023, revenue hovered around 700 million yuan, marking a significant deceleration in growth. The net profit attributable to shareholders also remained negative, totaling -825 million yuan, -1.256 billion yuan, and -848 million yuan, respectively. In the first three quarters of 2024, revenue reached 185 million yuan, up 27.09% year-on-year, but the net profit attributable to shareholders continued to incur a loss of 724 million yuan. Throughout its seven-year history, the company has yet to achieve profitability, raising concerns about its financial performance.

From a business structure standpoint, Cambrian's journey has been tumultuous. Initially, licensing terminal intelligent processor IPs was its primary revenue stream, notably through its collaboration with Huawei, which contributed significantly to its revenue in 2017-2018. However, after Huawei developed its own AI chips in 2019, Cambrian lost this key customer, necessitating a restructuring of its business model.

Since then, the intelligent computing cluster system business has emerged as pivotal in supporting Cambrian's performance. However, revenue from this segment heavily relies on a handful of major customers, who frequently change. For instance, Kunshan High-tech Industrial Investment Development Co., Ltd. in Jiangsu Province and Nanjing Science and Technology Innovation Investment Co., Ltd. were the top customers in 2021 and 2022, respectively. In 2023, the company primarily relied on intelligent computing cluster projects in Taizhou and Shenyang, posing considerable risks to business stability. Regarding R&D investment, Cambrian spared no expense in chip development from 2020 to 2022, with R&D expenses amounting to 768 million yuan, 1.136 billion yuan, and 1.523 billion yuan, respectively.

However, after being added to the U.S. Entity List at the end of 2022, Cambrian's supply chain was disrupted, leading to a sharp decrease in R&D expenditures. In 2023, R&D expenses dropped to 1.118 billion yuan, a year-on-year decline of 26.6%, accompanied by a 38% reduction in R&D personnel. Its subsidiary, Xingge Technology, also reported layoffs. For the first three quarters of 2024, R&D expenses amounted to 659 million yuan, down 8% year-on-year. While the reduction in R&D investment has alleviated financial pressure to some extent, it may adversely impact the company's technological innovation and future development. Sustained R&D investment is crucial for maintaining competitiveness in the fiercely competitive AI chip industry.

In stark contrast to its financial performance, Cambrian's stock price has soared. Since 2023, Cambrian's stock price has surged, increasing by 535% in 2023 and 157% in 2024. Its market value once exceeded 240 billion yuan and became the second most expensive stock on the A-share market in December, second only to Kweichow Moutai. The sharp rise in stock price has led to its inclusion in several key indices, such as the STAR Market 50 Index, CSI 300 Index, CSI A500 Index, and Guozheng Chip Index. Recently, it was also added to the SSE 50 Index, sparking heated market discussions.

Behind Cambrian's soaring stock price lies the market's high expectations for the AI chip industry. With the rapid development of AI technology, particularly the popularity of ChatGPT, the global demand for computing power and AI chips has surged. As one of the leading domestic AI chip companies, Cambrian has naturally become a market favorite.

Additionally, the passive allocation of index funds has also fueled this surge. Since Cambrian is included in multiple key indices, passive funds tracking these indices must allocate shares of Cambrian based on their weights, bringing in substantial incremental funds and further pushing up the stock price. However, this divergence between stock price and financial performance has sparked numerous questions.

From a valuation perspective, Cambrian's price-to-sales ratio stands out starkly from that of the constituents of the SSE 50 Index. The median price-to-sales ratio of SSE 50 Index constituents is 2.05 times, whereas Cambrian's is as high as 313 times, making its valuation particularly glaring given its continuous losses.

Furthermore, the behavior of venture capital shareholders is noteworthy. In 2023, venture capital shareholders such as SDIC Venture Capital Fund, Ningbo Hangao, Paleozoic Venture Capital, Nanjing CMBC, and Hubei CMBC sold off their Cambrian shares, collectively cashing out 4.183 billion yuan. This seems to indicate that investment institutions that know the company best lack confidence in Cambrian's future prospects.

From an industry competition perspective, Cambrian faces severe challenges. Integrated circuit giants like NVIDIA, Intel, Qualcomm, MediaTek, and Huawei Hisilicon have invested heavily in R&D or acquisitions in the smart chip field, intensifying market competition. Meanwhile, the domestic AI chip market is also highly competitive, with companies like Huawei and Hygon Information Technology posing significant threats in terms of market share and technical strength. Although Cambrian has accumulated certain technology, it is still at a disadvantage in competing for market share. Moreover, being listed on the U.S. Entity List has disrupted its supply chain, affecting product shipments and creating greater difficulties in R&D and market expansion.

Looking ahead, Cambrian's development is fraught with uncertainty. In terms of technological research and development, although the company has launched multiple smart chip products such as Sunyuan 290, Sunyuan 370, and Sunyuan 590, there is still a gap compared to international giants like NVIDIA. In terms of market expansion, Cambrian needs to break away from its reliance on a few key customers and establish a more stable and extensive customer base. It must also strive to build its downstream server ecosystem to increase product shipments and market competitiveness.

However, all of this requires substantial financial and time investments, and the company's current loss situation and financial pressure undoubtedly pose significant obstacles.

Cambrian finds itself in a dilemma with its stock price diverging from its financial performance. Its future development is fraught with both opportunities and challenges. Whether it can achieve a breakthrough in the AI chip field and truly become an internationally competitive enterprise will require time and market validation. Investors should view Cambrian's fundamentals and industry competition more rationally when focusing on its stock price trends, avoiding blind investment. For Cambrian, the priority is to accelerate technological innovation and market expansion, enhance its profitability and market competitiveness, and uphold its high stock price and market expectations. By doing so, it can avoid becoming a bubble stock, carve out a niche in the fiercely competitive AI chip industry, achieve sustainable development, and contribute to the rise of China's chip industry. Otherwise, if market sentiment changes or industry competition intensifies, its stock price may face significant correction risks, plunging Cambrian into an even more challenging situation.