VeriSilicon Holdings, dubbed "China's Broadcom," is experiencing a new growth acceleration as Goldman Sachs upgraded its 12-month price target from RMB 193 yuan to RMB 220 yuan ($30.2), maintaining a "buy" rating amid robust AI-driven order momentum.

The optimistic outlook stems from the company's explosive growth in AI computing orders, with VeriSilicon recording an 86% year-on-year surge in new orders from early July to mid-September. The company's order backlog has reached RMB 3 billion yuan ($412 million), with 64% originating from AI computing segments, establishing a solid foundation for future revenue growth.

On September 11, VeriSilicon announced plans to acquire 97% of Nuclei System Technology, a leading domestic RISC-V IP supplier, through a combination of share issuance and cash payments. The acquisition aims to address VeriSilicon's gap in CPU IP capabilities and build a more comprehensive heterogeneous computing IP platform.

Goldman Sachs raised VeriSilicon's net profit forecasts for 2027-2030 by up to 7%, though the investment bank lowered its 2025 earnings projection from RMB 139 million yuan profit to an RMB 18 million yuan ($2.5 million) loss due to increased R&D investments.

AI Order Surge Provides Strong Revenue Foundation

VeriSilicon's recent order surge demonstrates AI demand becoming the company's primary growth driver. The ASIC leader's third-quarter 2025 new orders jumped 86% year-on-year, bringing total order backlog to RMB 3 billion yuan, with 64% derived from AI computing applications.

Goldman Sachs expects this robust order book to support sustained revenue growth, particularly in custom chip design and IP licensing for smart automotive and AI terminal applications. The company's active expansion in AI cloud and edge computing ASIC projects has shifted its order structure toward high-growth sectors, improving revenue sustainability and cyclical resistance.

The strong AI-focused order composition reflects VeriSilicon's successful positioning in China's rapidly expanding artificial intelligence semiconductor market, where demand for custom chips continues to accelerate across multiple end-markets.

Strategic Nuclei Acquisition Completes Product Portfolio

VeriSilicon's September announcement to acquire Nuclei System Technology represents a strategic move to strengthen its comprehensive technology capabilities. The acquisition will be conducted through share issuance and cash payments, with cash comprising no more than 30% of the total consideration.

Nuclei, a pioneer in China's RISC-V IP sector, serves AI, automotive electronics, and IoT markets with IP licensing services generating over 90% gross margins. The acquisition will enhance VeriSilicon's RISC-V positioning and accelerate RISC-V technology commercialization through synergistic effects.

Goldman Sachs views the deal as filling VeriSilicon's CPU IP gap, complementing its existing GPU/NPU/ISP portfolio. This enhanced capability will strengthen the company's ability to serve smart automotive and AI device markets, including AI toys and tablets, solidifying its position as a comprehensive chip solution provider and driving increased customer spending.

Short-term Profit Pressure Offset by Stronger Long-term Growth

Goldman Sachs adjusted VeriSilicon's 2025 net profit forecast from RMB 139 million yuan profit to an RMB 18 million yuan loss, primarily reflecting R&D expense ratios rising to 47%. However, the investment bank raised 2026-2030 profit forecasts by 2-7% annually, expecting improved efficiency as revenue scales.

Revenue projections for 2027-2030 received modest upward revisions based on enhanced AI-related chip design services and semiconductor IP income expectations. Gross margins are expected to improve 1-2 percentage points in 2029-2030, with operating and net profit margins reaching 28-30% and 26-29% respectively, indicating systematic profitability improvements.

Using a 46x 2029 P/E discount methodology, Goldman Sachs values VeriSilicon at RMB 220 yuan, representing nearly 20% upside from current levels. The 2026 price-to-sales ratio of 23x reflects premium valuations within the AI chip and semiconductor IP sectors' favorable market sentiment.