Cambricon Stock Falls. China’s Hot AI Chip Maker Faces Competition.

China is trying to boost domestic semiconductor production. (STR/AFP/Getty Images)

Cambricon Technologies fell on Friday as the chip maker’s red-hot rally cooled off. Competition from Alibaba and a warning about its high valuation seem to be putting off investors.

Cambricon thrust itself into the spotlight this week after reporting that its quarterly revenue rose by around 4,000% amid surging demand for domestic artificial-intelligence chips, with Nvidia facing an effective ban on selling to the Chinese market.

Created with Highcharts 9.0.1Cambricon TechnologiesSource: FactSetAs of Aug. 29, 3:30 a.m. ET

Created with Highcharts 9.0.1April 2025Aug.4006008001,0001,2001,4001,600¥1,800

Investors have piled into the stock, which has climbed nearly sixfold in the past year in Shanghai trading. However, Cambricon still faces stiff challenges from domestic rivals such as Alibaba and Huawei Technologies, not to mention the threat that Nvidia will eventually be allowed to resume sales in China.

Alibaba, China’s biggest cloud-computing company, has developed a new AI chip to carry out a broader range of tasks than its previous in-house processors, according to The Wall Street Journal. Alibaba didn’t immediately respond to a Barron’s request for comment.

Cambricon issued a filing on Thursday, noting the major rise in its share price. It said it has no plan to launch any new products and expects full-year operating revenue of 5 billion yuan to 7 billion yuan ($698.9 million-$978.5 million), according to a translation using Gemini AI.

Cambricon shares fell 6% in Friday trading. The stock has a market value of 664.3 billion yuan.

Write to Adam Clark at adam.clark@barrons.com