Bernstein: Cambricon 1Q26 — Robust Beat Across the Board Driven by AI Chip Localization
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Bernstein reports that Cambricon delivered a robust beat across the board in the first quarter of 2026, primarily propelled by surging demand for AI chip localization. The company generated 1Q26 revenue of 4.5 billion RMB, representing an explosive 320% year-over-year growth and exceeding market expectations by 15%. Gross margin expanded significantly from 55% to 65% due to favorable product mix shifts and operational scale effects. Consequently, Cambricon achieved its first quarterly profit of 500 million RMB, a stark turnaround from a 200 million RMB loss in the prior year period. Domestic customer orders surged, increasing their revenue share from 70% to 85%. Supply-side constraints also eased markedly, with wafer production capacity growing 30% sequentially. The company subsequently raised its full-year 2026 revenue guidance to 20 billion RMB, doubling year-over-year. Bernstein projects further supply improvements in 2Q26, with capacity expected to grow another 20%, alongside anticipated volume shipments to newly qualified data center clients in the second half. Despite a 40% increase in research and development expenses, improved operating leverage reduced the R&D ratio to 20%. Maintaining an Outperform rating, Bernstein raised its target price to 800 RMB, based on 50 times 2026 projected earnings. Key risks include geopolitical uncertainties and heightened competition.
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