China’s Nvidia warns of overheating risks after 723% share surge

A more than eight-fold surge in the share price of Chinese graphics processing unit (GPU) maker Moore Threads Technology has prompted the newly listed company to warn investors that the gains may have run ahead of fundamentals.\nThe Beijing-based chipmaker said in a statement to the Shanghai Stock Exchange on Friday that its shares could face the risk of declines after the rapid rally. There was no catalyst that needed to be disclosed and no material change in the company’s fundamentals, it said.\nThe warning came just a week after Moore’s high-profile debut on December 5, when the stock jumped 425 per cent to become the second-best performing new listing in Shanghai this year in terms of first-day trading. Despite the outsized gain, the shares climbed another 57 per cent through Thursday. In total, they had surged 723 per cent from the offer price of 114.28 yuan.\n“The company’s shares have had a big swing in recent days,” Moore said. “There may be a situation of overheating on the market and irrational speculation. Investors should be well aware of the trading risk and make decisions prudently and investments rationally.”\n\nThe shares tumbled by as much as 19 per cent to 758 yuan on Friday on the technology-heavy Star Market.\nEuphoric demand for Moore’s shares underscores a massive pivot by Chinese investors to tech stocks after Beijing pledged to pull out all the stops to achieve its goal of tech self-reliance. The strategy was prioritised at a key economic policy meeting that concluded on Thursday and in a critical five-year development plan approved in October by the ruling Communist Party.\nFrenzied sentiment around Moore and other Chinese tech stocks also coincides with a global boom in artificial intelligence, with the Nasdaq 100 index refreshing new highs this year.\nDubbed as China’s Nvidia, Moore was founded in 2020 by James Zhang Jianzhong, who worked for the US chipmaker for 14 years. The Chinese company is also now focusing on AI accelerator chips for training large language models, moving away from low-end ones used for visual displays in games and other applications in its early days of business. It raked in 8 billion yuan (US$1.13 billion) from its initial public offering, the mainland’s second-largest stock sale this year.\nIn its exchange statement, Moore said its business outlook was uncertain, with new products yet to generate revenue. Sales would not be achieved until processes including product certification, customer guidance and mass shipments were completed, it said, adding that the company was lagging behind some global industry giants in research capability, accumulation of core technology and product ecosystems.\nMoore also flagged the risks of above-industry-average valuations. Its shares traded at 1,009 times sales, compared with 11.8 times for other electronics makers, the statement said.\nThe company reported a loss of 724 million yuan in the first nine months of this year due to higher research and development spending. Sinolink Securities forecast that Moore would turn profitable in 2027.\n