Cambricon (688256.SS): 3Q26 sequential increase continues; revenues to grow at triple digits through 2028; Buy

Despite a high base and tight raw material supply, Cambricon continues to deliver sequential revenues increase (+13% QoQ) and GM expansion (59% vs. 56% in 2Q26), reflecting the strong China AI chips demand and Cambricon's leading market position. We expect leading Chinese cloud platforms to grow capex by 105%/21%/14% YoY in 2026E-28E; our estimates were raised by 14%/15%/11% in 2026E-28E. The company aims for 4Q26 revenues QoQ growth to be no slower than 3Q26, with revenues growth to remain at triple digits through 2028. Inventory in 3Q26 increased 41% QoQ to Rmb11.7bn at end-3Q26, which could support future AI chips shipments. We remain positive on Cambricon's longer-term growth, supported by strong AI computing demand in China, the localization trend and continuous AI chip specification upgrades. Maintain Buy. We factor in Cambricon's 3Q26 result and revise our 2026E-30E net income estimates by -11%/-3%/0%/0%/+7%. Our target EV/EBITDA multiple is 23x (vs. 27x previously), applied to