30.12.2024
Mikhail Vnuchkov
Author at Traders Union
30.12.2024

AI sector powers China stocks to record gains

AI sector powers China stocks to record gains China AI stocks surge amid trade tensions

Shares of Cambricon Technologies Corp., a Chinese AI chipmaker, have soared by 383% in 2024, making it the top-performing stock in China this year. 

This surge has helped the Shanghai-listed company reach a market value of $37 billion, surpassing industry giants such as Nvidia Corp. and Taiwan Semiconductor Manufacturing Co. The remarkable growth comes as China ramps up efforts to localize its technology sector, particularly in artificial intelligence, amid ongoing U.S. trade restrictions, reports Bloomberg.

Cambricon’s impressive gains are fuelled by investor enthusiasm over the country’s increased support for its tech industry, including the recent inclusion of the company in the Shanghai Stock Exchange 50 Index. This addition will likely attract further investments from large-cap funds, providing an additional boost to the stock.

The future of China AI market

According to analysts from Minsheng Securities, China’s push for AI chip localization has become a major trend. Domestic companies like Cambricon and Huawei Technologies are rapidly closing the gap with international leaders. Despite still operating at a loss, Cambricon’s third-quarter sales surged by more than 280%, indicating strong demand and growth potential moving forward.

Looking ahead, Citigroup analysts predict that the shift toward localized graphics processing units (GPUs) could significantly erode Nvidia’s market share, which is expected to drop from over 80% in 2024 to 50%-60% by 2025. Huawei and Cambricon are expected to benefit the most from this trend, as China continues to prioritize self-sufficiency in critical technologies.

A broader trend in China tech sector

China’s push to reduce dependence on foreign tech has not only propelled Cambricon’s success but also led to impressive gains for other domestic companies. Optical module maker Eoptolink Technology and data provider Range Intelligent Computing Technology Group saw their stock prices more than double this year, as AI-related stocks outperformed the broader market.

Reminder, ​shares of South Korean companies linked to Squid Game saw significant declines on Friday following the mixed reception of the show’s second season. 

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