Cambricon Technology Corporation (688256.SS): 3Q26 Preview: Looking through 3Q softness to a stronger 2027

Morgan Stanley keeps Overweight on Cambricon and raises its price target to Rmb1,700 from Rmb1,408 (about 73% upside). We expect 3Q26 revenue of Rmb3.65bn, below our prior Rmb4.77bn estimate, mainly owing to delayed MLU690 series (MLU692) revenue recognition and limited MLU580 deliveries. We turn more constructive on 2027: we expect Cambricon to ship nearly 350k units in 2027 to CSP clients, supported by the MLU692 ramp and the next-generation MLU580, relying primarily on SMIC N+2/N+1 capacity. HBM3e remains a key constraint, but supply chain checks suggest Cambricon has some inventory on hand and could secure a share of CXMT's HBM3e output as domestic capacity ramps. We raise our forecast of China's domestic AI accelerator TAM in 2030 to US$132bn from US$91bn given higher chip pricing, and expect China's AI chip self-sufficiency to rise from 35% in 2025 to 68% in 2027 and 95% by 2030. Reflecting a stronger product cycle, we raise 2027/2028 revenue forecasts to Rmb54bn/Rmb77bn, cutting