In a remarkable twist within the world of technology investments, the company known as Cambrian has defied conventional expectationsDespite suffering from repeated financial losses, its stock price has soared, reaching an all-time high of 461 yuan at the closing on November 19, pushing its market capitalization to an astonishing 192.4 billion yuanJust under a year prior, at the beginning of 2024, Cambrian's shares were valued at around 136 yuan, with the market cap hovering around 57 billion yuanThe company's stock has seen a staggering increase of more than 240% over 11 months, raising questions about what has driven such unprecedented growth against the backdrop of financial instability.

When looking closely at Cambrian's financial performance, the story becomes more nuancedFor the first three quarters of 2024, Cambrian reported revenues of only 185 million yuan, while its net profit attributable to shareholders recorded a significant loss of 724 million yuanWith these stark figures, one must wonder what forces are propelling Cambrian’s valuation to heights exceeding 190 billion yuan.

On the surface, Cambrian appears to be enjoying a hot streak in the secondary market, but the underlying performance raises eyebrowsHowever, the third quarter of 2024 saw a remarkable revenue growth of 285%, igniting a flurry of optimism among investors and market analysts regarding the company's future growth prospects.

A closer inspection of Cambrian's shareholder structure reveals the presence of several exchange-traded funds (ETFs) among its top ten shareholders, and it is noteworthy that these funds increased their stakes during the third quarterETFs are passive investment vehicles that aim to mirror the performance of specific indices by investing according to the distribution weights of the underlying securitiesThus, Cambrian appears to have gained its elevated stock price and market cap partially through the backing of institutional investors.

The etymology of the name "Cambrian" pays homage to a geological epoch renowned for the explosion of biodiversity 542 million years ago

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In a modern context, it symbolizes Cambrian’s ambitions to be at the forefront of artificial intelligence advancements, reflecting a hope for an impending explosion of AI technologies.

Established in March 2016, Cambrian emerged from a small academic team of ten at the Institute of Computing Technology of the Chinese Academy of Sciences, focused on exploring processor architectures and artificial intelligenceThe team garnered expertise from top-tier universities, boasting qualifications in computer science and microelectronics.

Despite Cambrian’s foundational promise, its financial journey has been rockyPost-establishment, Cambrian witnessed explosive growth in revenues but continued to incur lossesThe figures tell a concerning story: from 2017 to 2019, Cambrian reported revenues of 7.84 million yuan, 117 million yuan, and 444 million yuan, but consistently recorded net losses that deepened dramatically.

The turning point seemed to be Cambrian's successful public listing on the Star Market in July 2020, making it the first AI chip company to do soHowever, its inaugural year ended with revenues tapering off to 459 million yuan and a continuing net loss of 4.35 billion yuanObservers noted that the plateauing of revenue growth, coupled with consistent deficits, does not bode well for investor confidence.

Between 2021 and 2023, Cambrian's revenue stagnated around 700 million yuan, with net losses widening year after yearAltogether, over a span of seven years, Cambrian accumulated a staggering loss of approximately 4.9 billion yuan.

Despite these disheartening statistics, Cambrian managed to achieve a revenue of 185 million yuan in the first three quarters of 2024, although this still translated to a net loss of 724 million yuan—less than the 808 million yuan it lost in the same period the previous year, signifying a modest improvement.

Looking ahead, Cambrian is under pressure to hit its ambitious revenue target of at least 1.1 billion yuan for 2024, as outlined in its employee stock incentive plan

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Analysts from various brokerage firms remain optimistic about Cambrian's potential, predicting that the fourth quarter typically contributes substantially to annual revenue totals, estimating a total revenue exceeding 1.4 billion yuan for 2024.

Yet, like many industry insiders, brokerage analysts also foresee continued financial losses for Cambrian, with expectations of a 512 million yuan loss in 2024 before a possible return to profitability in 2025.

One of the notable challenges for Cambrian has been its dependence on a small number of customers for revenueHistorically, the company has seen its largest client change frequently, prompting concerns about the sustainability of its financial model.

Cambrian's business model is centered on the design and sale of intelligent chips, outsourcing wafer manufacturing and assembly processes to external partnersThis division of labor has allowed the company to remain focused on its core competencies, though it raises questions about long-term viability.

Interestingly, the viability of Cambrian's growth strategy had shifted significantly over recent years, with its primary product lineup changing in response to market demandsBetween 2017 and 2019, Cambrian recorded substantial income from licensing its processor IP, heavily reliant on Huawei's HiSilicon division as a major clientHowever, when Huawei shifted to designing its own chips, Cambrian found itself not only losing a significant customer but also facing increased competition.

By 2020, Cambrian adapted by bolstering its intelligent computing cluster systems businessRevenues from this segment grew steadily between 2021 and 2023, making up an increasingly significant proportion of total income, which suggests the company is pivoting effectively in response to changing market dynamics.

In 2024, Cambrian is on track to see substantial revenue growth driven primarily by its first leading client, which has changed annually

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The question remains: can it maintain growth in a fluctuating client relationship landscape? As of mid-2024, Cambrian's overall revenue was pegged at 64.76 million yuan, primarily generated through its cloud product line, with further potential revenue streams yet to be fully realized.

The third quarter yielded promising results, recording an impressive revenue of 1.21 billion yuan—an astonishing 284.59% year-on-year increase, thanks to strong performance across sectors, although additional information regarding individual business growth has yet to be disclosed.

The rollercoaster ride of Cambrian's stock price brings to light the volatility of tech investmentsFollowing its market debut in July 2020, Cambrian's share price surged to 295 yuan, helping to breach the 100 billion yuan market cap threshold before a stark decline set inA year later, shares plummeted to around 100 yuan, and 2022 saw the price stagnate, oscillating between 50 to 70 yuan.

However, with the explosive popularity of AI technologies, particularly following the rise of ChatGPT in 2023, Cambrian's stock began to reclaim its former glory, escalating to 271 yuan and re-entering the 100 billion yuan cap club.

In the latter half of 2023, Cambrian experienced a flurry of selling, with several shareholders liquidating their positions significantlyHistorical data indicated that the prices at which shares were offloaded fell below 270 yuan, prompting further speculation about the market's volatility.

Fast forward to February 2024, and Cambrian shares seemed ready to tumble once more, but buoyed by optimistic projections about computational power growth, the stock broke through the 200 billion yuan market cap barrier, signaling a resurgence in investor confidence.

This substantial increase in valuation highlights the successful strategy of actively managing share allocations amongst institutional investors through ETFs, as seen in the third quarter's reports where four ETFs raised their positions, collectively holding a whopping 8.25% of Cambrian's circulation.

In summation, amid the AI boom, Cambrian is projected for significant revenue inflow, catalyzed by institutional investment

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