Wall Street Bullish: Macquarie Touts Chinese AI Chip Stocks, Crowns Cambricon as Top Pick Amid Tech Race

Wall Street titan Macquarie is making a bold call: the "best time" to invest in China's rapidly evolving AI chip sector is now. In a comprehensive late June report, Macquarie's China Information Technology analysts highlighted several catalysts driving this optimism, including the remarkable advancements in artificial intelligence, the burgeoning ecosystem of domestic large language model (LLM) players, and China's unique token economy.

Adding further momentum, the People's Republic of China (PRC) government's steadfast support for indigenous AI chip firms is enhancing their growth prospects. This support, partially manifested through import restrictions on advanced Nvidia GPUs—a move that mirrors U.S. export controls—is pushing Chinese companies to innovate domestically. While the U.S. permits the sale of some less advanced Nvidia chips to China, Beijing's appetite for these foreign components is demonstrably waning, signaling a clear push for self-sufficiency.

At the forefront of China's AI-capable semiconductor discussions is Huawei with its formidable Ascend chips. Though Huawei itself shows no signs of going public, several other key players in the sector are already actively traded on exchanges in Hong Kong and mainland China.

Macquarie has initiated coverage on five of these companies, with Shanghai-listed Cambricon emerging as its clear favorite, earning an "outperform" rating. Analysts lauded Cambricon for strategically shifting its core customer base from government intelligent computing clusters to leading domestic cloud providers and LLM developers. This pivot is expected to result in a more balanced sales mix, robust margins, and healthy cash flows. Macquarie has set an ambitious price target of 2,060 yuan ($303.43) for Cambricon, suggesting a potential upside of over 50% from its recent closing price.

Among the Hong Kong-listed Chinese AI chip stocks, Macquarie's preference leans towards Biren Tech, assigning it a price target of 140 Hong Kong dollars ($17.85)—a projection that implies more than a double from Friday's close. The analysts expressed their appreciation for Biren's General-Purpose computing on a Graphics Processing Unit (GPGPU) product portfolio, which is heavily geared towards higher computational power, advanced chip interconnectivity, and large-scale computing clusters. Furthermore, Biren's dedicated focus on nurturing a domestic supply chain is anticipated to bear significant fruit, especially in facilitating future product launches.

Other notable favorites in Macquarie's assessment include Hong Kong-listed Iluvatar CoreX, followed by Shanghai-listed MetaX.

Conversely, Shanghai-listed Hygon was identified as Macquarie's least favored stock within the group, primarily due to escalating concerns over potential market share losses. Analysts acknowledged Hygon's strong positioning in China's CPU and AI chip sector but attributed much of its historical success to technology transfer from AMD. They foresee limited upside for the sector specifically from agentic AI development, leading to an "underperform" rating for Hygon.

Beyond these dedicated chip makers, tech giants Alibaba and Baidu also operate subsidiaries actively developing AI chips. However, in terms of sheer delivery volume, Huawei maintains its commanding lead. According to the Macquarie report, which cited IDC data, Cambricon ranked a distant second to Huawei's Ascend in AI chip shipments last year, with Hygon trailing in third place.