In China’s stock market, a common belief holds that when a company’s share price surpasses Kweichow Moutai’s, a decline often follows.
The latest contender is Cambricon. After its stock rose tenfold in just over a year, the company briefly reached the top on August 27 when its intraday price hit RMB 1,465 (USD 205.1), overtaking Moutai.
However, the lead lasted only a day before Cambricon’s shares turned downward, and this drop has raised questions: will Cambricon follow the same path as earlier challengers?
Over the past eight years, no company has managed to remain above Moutai’s stock price. Historically, 14 companies have done so, most around 2015, a year that marked both the peak of China’s last bull market and the end of the mobile internet bubble.
To examine the pattern, 36Kr reviewed the performance of those 14 companies, as well as Cambricon, after they surpassed Moutai.
Losing ground within weeks
The review found that aside from China State Shipbuilding Corporation and Yanghe Distillery, none of the companies held their gains for more than a year after overtaking Moutai.
Half began to decline within a month of reaching the top. Among them, G-bits, China Literature, Changchun High-Tech, Hepalink, and DingLi Communications were still down a year later.
Many of these companies were tied to the mobile internet boom. These included Baofeng in online video, AnShuo in internet finance, and G-bits in gaming, each reflecting a surge of investor interest that proved short-lived.
Baofeng illustrates the risks. In 2015, its stock climbed to RMB 327 (USD 45.8), briefly overtaking Moutai at the height of the bull market. After crossing that milestone on May 14, prices rose further until the ChiNext bubble burst in June, triggering China’s 2015 stock market crash. Baofeng’s shares fell sharply and never recovered.
From 2016 onward, the company struggled to adapt, spent heavily on expansion, and recorded losses. Scandals followed, including the imprisonment of its founder. By the time Baofeng was delisted for financial and management failures, its shares had dropped to RMB 0.28 (USD 0.04), erasing nearly all of its peak market value.
Another example is Qtone Education. Its stock remained elevated longer, supported by favorable policies, acquisitions, and its positioning in online education.
By 2016, Qtone was China’s most valuable education stock, with a price-to-earnings (P/E) ratio of more than 1,600. For comparison, New Oriental had a market cap of about USD 3.8 billion at the time, with a P/E ratio of around 19. But Qtone’s growth relied heavily on acquisitions, as shown in its 2016 annual report, which detailed nine consolidations that year.
The turning point came in early 2017, when Qtone reported its first quarterly loss. Its stock soon fell to a fraction of its peak value.
Cambricon’s valuation towers over past rivals
The trend is consistent: companies that overtook Moutai were usually propelled by speculative themes, without fundamentals strong enough to support their valuations. When sentiment shifted, their stock prices fell.
Nearly a decade later, Cambricon’s rise is taking place during an investment boom in artificial intelligence that resembles the earlier mobile internet wave. Positioned as a domestic chip company, it has become a market focus, lifted by interest in AI and geopolitical factors.
But uncertainty is building: could this cycle fade as quickly as the last?
Valuations are stretched. When the 14 earlier companies surpassed Moutai, their average P/E ratio was 232. Cambricon’s is about 514. Historically, its rolling P/E ratio has been 26 times the industry average, and at its peak nearly 58 times higher.
On August 28, Cambricon issued a risk warning, noting that its price had diverged significantly from fundamentals. By September 4, its shares had fallen 14.45% to RMB 1,202 (USD 168.3), while Moutai slipped 0.53% to RMB 1,472.7 (USD 206.2).
Cambricon’s trajectory since overtaking Moutai has been similar to earlier cases: it rose briefly to RMB 1,587 (USD 222.2) before declining.
The broader market context, however, is less volatile than in 2015. That year, the Shanghai Composite Index climbed 57% between January and June. This year, it has risen 21%, from about 3,150 points at the start of the year to around 3,800.
Still, today’s risks may be more pressing. The 2015 downturn was triggered by domestic leverage unwinding. In 2025, the challenges are largely external: geopolitical tensions, concerns about global recession, and slower-than-expected recovery at home. For Cambricon, these pressures could be more direct than for most companies.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Song Wanxin for 36Kr.