AsianFin--China's leading AI chipmaker Cambricon Technologies, with a market value of over 100 billion yuan (US$ 14 billion), has once again made headlines with its latest financial report, raising questions about the sustainability of the AI boom.
According to its 2024 first-half earnings report, Cambricon's revenue plummeted by 43.42% year-on-year to 64.76 million yuan. The company's net loss attributable to shareholders reached 530 million yuan, a slight reduction of 2.7% compared to the previous year. Meanwhile, the net loss after deducting non-recurring items stood at 609 million yuan, narrowing by 4.98% year-on-year.
This marks the eighth consecutive year of losses for Cambricon. As of now, the company's cumulative net losses have reached nearly 5.5 billion yuan.
Cambricon is not alone. Other major AI players, including Baidu (Q2 net profit down 8%), iFlytek (net loss of 470 million yuan), and SenseTime (net loss of 2.477 billion yuan), have also reported underwhelming results in their latest financial statements, adding to concerns about the industry's profitability.
What’s more perplexing is that Cambricon’s market capitalization currently stands at 105.2 billion yuan, while its revenue for the first half of the year barely exceeded ¥64 million. The company's price-to-sales ratio (PS), calculated based on half-year revenue, has soared to an astonishing 814 times—far higher than that of industry giant Nvidia, which has a PS ratio of just over 30. Additionally, since its IPO in June 2020, Cambricon has not distributed any dividends, further fueling skepticism.
This discrepancy has led to the company being dubbed the "dream-chasing stock" by netizens, as it seemingly thrives on market hype rather than solid financial performance.
In contrast, the recent success of the domestic video game "Black Myth: Wukong" has highlighted the stark differences in profitability. The game sold over 10 million copies within just 33 hours of release, generating over 3.2 billion yuan in sales. After deducting development costs of 300-400 million yuan, the game's net profit is estimated to exceed two billion yuan—a stark contrast to the struggles of the AI sector.
Despite the ongoing AI frenzy sweeping the globe, issues such as weak profitability, continuous losses, and heavy R&D expenditures have plagued the industry. Over the past six months, the revenue-generating ability of China's generative AI sector pales in comparison to the profit generated by a single domestic game in less than four days.
"Without profitability, even the best AI technology is worthless," the CEO of an AI-related company told TaiMedia App. Whether it is a bubble or an opportunity, the ongoing AI race ultimately comes down to one crucial factor: survival.
In late April, just in time to meet the STAR Market’s annual report deadline, Cambricon finally released its 255-page 2023 earnings report.
The report revealed that in 2023, the company generated total revenue of ¥709 million, a year-on-year decline of 2.7%, while its net loss attributable to shareholders reached ¥848 million, down from ¥1.257 billion in the previous year.
Cambricon’s cloud product line took a major hit, with revenue plummeting from 219 million yuan in 2022 to just 90.56 million yuan in 2023, a 58.73% decline. The company's edge computing business fared even worse, with revenue dropping to 4.77 million yuan, a year-on-year decrease of 71.39%.
With its latest performance failing to inspire confidence, Cambricon's future remains uncertain. As the AI hype continues, the question on everyone’s mind is: when will the bubble burst?
