Recently, Cambrian Technology, often referred to as the "first AI chip stock," released its half-year performance report for 2023, revealing that the company is still operating at a lossThis high-profile tech firm, which aims to be a leader in artificial intelligence hardware, has faced significant challenges in its financial journey.

In an interesting twist, during a bullish market trend earlier this year, Cambrian's stock price saw a substantial increase, prompting investments from several institutions including the Shanghai Stock Connect and public fundsIn stark contrast to this trend, three of Cambrian's original shareholders have completely divested their holdingsThis sudden shift in market sentiment raises questions about the company’s future performance and the potential implications for investors.

Cambrian’s half-year report revealed that it generated revenue of approximately 114.5 million yuan in the first half of 2023, marking a significant 33.37% decline year-over-yearThe net profit attributable to shareholders was nearly a loss of 544.8 million yuan, primarily attributed to "ongoing research and development investments," according to the company's representativesThis aligns with a broader trend within the tech sector, where heavy R&D expenditures are often necessary to stay competitive.

Since its inception, Cambrian has grappled with persistent lossesOver the years 2020 to 2022, the company posted losses of 434.5 million yuan, 824.9 million yuan, and 1.257 billion yuan respectively, culminating in a staggering total loss exceeding 2.5 billion yuan over just three yearsThis financial trajectory poses a critical challenge for the company as it seeks to establish a sustainable growth model.

Notably, due to these continuous losses, Cambrian has not distributed any dividends to its shareholders since its public listing, a fact that may deter some investors seeking immediate returns.

At present, Cambrian has not opted to reward the market through dividends but has successfully raised over 4.1 billion yuan through two rounds of fund-raising since going public

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In July 2020, the company's initial public offering collected approximately 2.497 billion yuan, and a targeted issuance in April 2023 brought in another 1.649 billion yuan.

Looking at Cambrian's stock performance, the first quarter of 2023 marked an impressive upsurge, showcasing a staggering 240.82% increaseThis boost in stock value can be traced back to the rising interest in AI technologies following the launch of ChatGPT, which sparked newfound excitement in AI computing capabilities and associated chip technology.

Industry experts have highlighted that AI computing power is the backbone of models like ChatGPT, with AI chips being a crucial component of this infrastructureConsequently, as AI applications evolve, the demand for advanced AI chips is expected to rise dramatically, setting the stage for companies such as Cambrian to potentially reap significant rewards.

On March 19, 2023, analysts from Zheshang Securities acknowledged Cambrian as one of the most representative local AI chip manufacturers in China, noting the company's role in providing core AI chips for various cloud servers, edge computing, and terminal devicesThey expressed optimism that the successful deployment of AI technologies would catalyze new growth for Cambrian.

As of the first half of 2023, Cambrian's revenue was heavily reliant on its cloud product line, which accounted for 95.04% of total revenue, compared to just 4.58% from its edge product lineThis skewed revenue profile emphasizes the company's current business strategy and market positioning.

During the second quarter, Cambrian's stock price gradually approached its peak, attracting interest from both domestic and international investorsBy the end of Q2 2023, 576 public funds held 19.82% of the company's shares, a significant jump from just 131 funds holding 5.21% a year earlierThis astonishing increase underscores a burgeoning confidence in Cambrian's potential among institutional investors.

In the rankings of Cambrian's top ten shareholders in Q2, it was notable that while the Galaxy Innovation Growth Hybrid Securities Investment Fund reduced its holdings, three other public funds opted to increase their stakes

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Additionally, the Hong Kong Central Clearing Limited has emerged as the sixth-largest shareholder with a 1.06% stake, demonstrating ongoing interest from international markets.

Analysis of the K-line chart shows that during the second quarter (from April 1 to June 30), Cambrian's stock price fluctuated between 175.05 yuan and 271.47 yuanThis range indicates that the institutions investing in this period likely had an entry cost of at least 175 yuan per share.

As the market moved into the third quarter (July to September), Cambrian's stock entered a correction phaseBy September 1, the closing price had dropped to 148.83 yuan, leading to a total market capitalization of 62 billion yuanIf the aforementioned institutions have held onto their oversupply, they would be facing a paper loss exceeding 14% compared to the current closing price.

In contrast to the institutional buying trend, the three original shareholders of Cambrian have engaged in significant sell-offsBetween February 9 and June 7, 2023, the Nanjing Zhaoyin Telecommunications New Trends Lingxiao Growth Equity Investment Fund Partnership and the Hubei Changjiang Zhaoyin Growth Equity Investment Partnership sold off holdings worth approximately 387.9 million yuan and 191 million yuan respectively, leaving them with no remaining sharesFurthermore, between March 23 and August 24, the Suzhou Industrial Park Paleolithic Venture Capital Partnership sold off around 1.071 billion yuan worth of stock, culminating in total divestment.

Examining these divestments through the lens of investment cycles and profitability, it appears these original shareholders capitalized on the significant appreciation in Cambrian's stock price during the first quarter of 2023. By selling at this peak, they were likely able to maximize their returns after a period of holding onto their investments following the company's IPO.

From a market signal perspective, the original shareholders' complete divestment may convey negative sentiment towards Cambrian, potentially instilling concerns among investors about the company’s prospects

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