Cambricon Resists Index Rebalance as China’s AI Boom Gains Strength

Cambricon shares are expected to hold investor interest even as a major index adjustment threatens to trigger over $1 billion in passive selling. The AI chipmaker, often compared to Nvidia, saw its stock price more than double in August, lifting its share of the STAR50 Index above the 10% cap for a single company. The quarterly reweighting taking place after Friday’s close could force roughly 8 billion yuan ($1.1 billion) in outflows from funds tracking the index, according to Reuters estimates.

After sliding 14% last week on profit-taking and concerns over the rebalance, Cambricon has already rebounded, climbing 10% this week and nearing record highs. The company is valued at an eye-catching 521 times trailing earnings, far above Nvidia’s 50 multiple.

Analysts and fund managers believe the reweighting will not derail the broader rally in Chinese AI equities, underpinned by Beijing’s push for technological independence, the DeepSeek breakthrough, and heavy investment from major players like Alibaba, Tencent, and Baidu. With Cambricon’s stock up 113% this year—most of that surge in the past month after reporting a first-half profit—the AI sector has become a key driver of China’s bull market.

The global AI boom has also supported sentiment, with the Nasdaq hitting records on Nvidia’s strong gains. Many market observers now argue that China’s AI industry has reached a new stage of self-sustaining growth, making comparisons to the U.S. AI surge increasingly credible.