In the financial world, certain events can send shockwaves through the market, and in recent times, the surge in stock prices of Cambrian Technologies has done just thatWith its stock price reaching unprecedented heights, the company has set the world ablaze, particularly among investors who have witnessed a remarkable rally in its sharesJust a day after hitting the daily limit of 20% rise, Cambrian's stock skyrocketed by 6% within the first twenty minutes of trading, soaring to 795.8 yuan per share, thereby surpassing its previous record of 777.77 yuan set back on January 10. As it inches closer to the elusive 800 yuan mark, it raises eyebrows and questions across the financial landscape.

Over the past two years, Cambrian Technologies has emerged as one of the most talked-about stocks on the marketSince the beginning of 2023, its stock price has rocketed from a mere 54 yuan to nearly 800 yuan, a staggering increase of nearly fourteenfoldThis meteoric rise not only highlights the company’s lucrative potential but also positions it as one of the standout performers within the A-share market, a feat achieved by only a handful of companies.

Nevertheless, Cambrian's trajectory is a double-edged sword, provoking a mixture of admiration and disdainInvestors riding the bullish wave relish in the consistent high performances, akin to a honey-sweet enchantmentConversely, short-sellers are left in a state of disbelief, continually finding themselves on the losing sideThe discomfort associated with missing out on market opportunities can often feel more unbearable than being stuck in a losing position.

However, the skepticism directed towards Cambrian is not unfoundedThe company has faced persistent criticism regarding its actual performance metricsJust a month ago, Cambrian announced its projected revenues for 2024, estimating between 10.7 billion to 12 billion yuanTaking the upper limit as a standard, one can't ignore the fact that its market capitalization now exceeds 320 billion yuan

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This translates to an astronomical price-to-sales ratio nearing 300, placing Cambrian within the top three most expensive stocks in the entire A-share market composed of over 5,000 companies.

If one delves into the price-to-earnings ratio, the numbers paint an even grimmer pictureWith the company still in losses, projected net losses range from 396 million to 484 million yuanAdjusted for non-recurring items, the net losses extend to somewhere between 765 million to 935 million yuanEstablished in 2016, Cambrian has struggled to turn a profit since its inception, accumulating losses close to a staggering 6 billion yuan in just a few years.

The critical question arises: How does a company consistently reveal losses still see its stock price reaching record highs? A deeper examination reveals that stock prices often reflect future potentialCambrian has managed to cultivate a vision, which becomes evident throughout its growth journeyThe company was founded in March 2016, and just two years later, it entered the fray during the U.S.-China trade conflicts and the tech war, targeting industry giants like ZTE and HuaweiThese events propelled Cambrian into the spotlight, signaling its importance in China's tech sovereignty.

U.S. pressure catalyzed a subconscious desire within China to achieve autonomy within the tech sphere, particularly in the often-overlooked yet crucial field of semiconductorsBack in the day, Cambrian partnered with Huawei, igniting hope and expectations within the industryThe company's quick listing on the STAR Market underscored national backing in overcoming technology challenges, further signifying that its success could inspire other domestic enterprises, thus transforming the entire STAR market into a hub for chip innovations.

As time progressed, the rise of AI chips changed the game entirelyNvidia emerged as the global frontrunner in the AI chip industry, while Cambrian sought to follow in its footsteps, earning the moniker China's Nvidia

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Nvidia's stock soared due to substantial orders and tangible profits, with last year's net profit soaring to an impressive $80 billionThis stark contrast in performance underscores a fundamental principle: stocks fundamentally depend on the solidity of their underlying performance as a gauge for long-term growth.

In the past six months, multiple brokerage firms such as Everbright Securities have issued buy ratings, with others like Minsheng Securities also echoing positive sentimentsGuosheng Securities projected Cambrian's revenue over the next three years at 1.707 billion, 4.975 billion, and 6.448 billion respectivelyHowever, approximately two months later, Cambrian's revenue forecast fell short of those enthusiastic predictions, capping the upper limit at 12 billion yuan, revealing a stark contrast to prior expectations.

Then came the advent of DeepSeek in late January—a technology that gained attention for its exceptional capabilities while costing only a fraction of what OpenAI's equivalent wouldOne can imagine the confidence boost this ignited within the Chinese tech communityDeepSeek's entire team had been educated in China, devoid of any affiliations with foreign enterprises, solidifying its status as an entirely homegrown tech ventureThis presented a breakthrough moment, instilling hope within an industry striving for advancements in artificial intelligence.

In earlier forecasts, some anticipated that DeepSeek’s creation would lessen the demand for high-end chips, potentially harming NvidiaInterestingly, this caused a temporary dip in Nvidia's stock, parallel to CambrianHowever, as we view things in hindsight, the predictions proved to be misleadingCambrian's stock regained its footing, whereas Nvidia’s began to climb back as wellIt’s important to note that DeepSeek's arrival significantly reduced the costs associated with large model applications, thereby broadening their accessibility, and consequently increasing the demand for computing power.

This situation mirrors BYD’s contributions to electric vehicles—a notable reduction in costs led to a surge in demand for power batteries across the sector

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