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

We expect Cambricon to report 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, supported by the MLU692 volume ramp and higher pricing, and expect Cambricon to ship nearly 350k units in 2027 to CSP clients. We raise our forecast of China's domestic AI accelerator TAM in 2030 to US$132bn from US$91bn, mainly reflecting higher chip pricing given surging memory prices. We lower our 2026 revenue estimate but raise our 2027 and 2028 forecasts, and now forecast 2027 revenue of Rmb54bn. Accordingly, we cut 2026e EPS 18%, while raising 2027e 17% and 2028e 26%. We remain OW and raise our price target 20% to Rmb1,700 from Rmb1,408.