Goldman Sachs Slaps Eye-Popping $255 Target on Chinese AI Chip Giant Cambricon, Sees 48% Upside

In a move that has reignited the market's speculative fervor for China's domestic AI hardware, Goldman Sachs has released a new research note on August 24, doubling down on its bullish stance on the nation's leading AI chip designer, Cambricon Technologies Corp. Ltd. The investment bank hiked its 12-month price target for Cambricon by a staggering 50%, from 1,223 yuan to 1,835 yuan, citing a confluence of surging cloud CAPEX, supply chain diversification, and the company's own ambitious R&D roadmap.

The report is generating significant buzz not just for its aggressive target—implying a 47.6% upside—but for the strikingly long-term valuation model used to justify it. In a market often fixated on next-quarter earnings, Goldman's analysts are peering six years into the future, to 2030, to build their case, a methodology that warrants a closer look.

Three Catalysts Fueling The Bull Case

Goldman's optimism is anchored by three core drivers which it believes will propel Cambricon's growth. The first is a dramatic surge in capital spending by China's domestic cloud service providers. The bank highlights recent data showing a massive uptick in cloud investment:

"Tencent Holdings Ltd. reported a 119% year-over-year increase in capital expenditures for the second quarter of 2025. Based on this, we are upgrading our CAPEX forecast for the Chinese cloud market, which will directly benefit upstream AI chip suppliers."

Second, the report points to the accelerating trend of supply chain diversification as a powerful tailwind for local champions. As Chinese tech giants iterate their own large language models, the need to secure a resilient and politically insulated hardware supply chain becomes paramount. Goldman notes that this shift is already underway:

"The iteration of domestic large models, such as those from DeepSeek, is being adapted for next-generation domestic chips. This helps customers mitigate reliance on a single supplier amid tariff uncertainties and data security concerns, creating market space for local players like Cambricon."

Goldman adds that Cambricon has already passed compatibility tests with DeepSeek administered by the China Academy of Information and Communications Technology (CAICT), validating its R&D capabilities.

Finally, Cambricon’s own commitment to innovation has been reaffirmed. The Shanghai Stock Exchange recently approved the company's proposal for a private placement to raise RMB 4.5 billion (approx. US$620 million) over the next three years, specifically for AI chip and software R&D. This implies an annual research budget of around 1.5 billion yuan, up from 1.2 billion yuan in 2024.

How Goldman Gets To 1835 Yuan: A Look Into The Crystal Ball

The most scrutinized part of the report is the valuation itself. Goldman eschews conventional near-term P/E multiples, opting instead for a discounted forward EV/EBITDA model. The analysts have anchored their entire framework to the year 2030.

The logic, as explained by the bank, is that by 2030, Cambricon's financials will have matured to a point where they are more comparable to global peers.

"The valuation base year is set to 2030, at which point Cambricon's EBITDA margin is projected to reach 22%, making it more comparable to the profitability levels of global peers like Nvidia and AMD."

To arrive at the valuation, Goldman significantly raised its target multiple on Cambricon's 2030 estimated EBITDA from 49x to 65x. The justification for this hike is a broad "re-rating of China's AI supply chain," supported by observations that the ratio of EV/EBITDA to forward EBITDA growth for leading Chinese semiconductor peers has expanded from 1.1x to 1.5x.

This future enterprise value is then discounted back to 2026 using a 12.7% cost of equity to derive the 1,835 yuan per share target.

Cross-Validation: 'Not Overvalued'?

Anticipating skepticism, Goldman’s report includes several cross-checks to argue that its valuation is not excessive.

• EV/Sales: The 1,835 yuan target translates to a 9x EV/Sales multiple on 2030 estimates. The bank notes this is below Cambricon's own historical trading range of 22x-61x since 2022 and sits reasonably between Nvidia's 15x forward EV/Sales (on 2026E) and AMD's 7x (on 2026E).
• P/E Ratio: The target implies a dizzying 253x P/E on 2026 earnings, but a more palatable 44x P/E on 2030 earnings, which Goldman deems "reasonable" when benchmarked against the growth profiles of Chinese semiconductor peers.

The report concludes by outlining bull and bear scenarios, underscoring the high degree of uncertainty. In a "bull case," if Cambricon's AI chip shipments achieve a CAGR of approximately 90% through 2030 to reach 3.5 million units, the price target could soar to 3,934 yuan. Conversely, in a "bear case" where shipment growth slows to a 60% CAGR, the target would fall back to 1,211 yuan.