Haiguang Information is undoubtedly one of the most dazzling star companies in the semiconductor sector.

Firstly, the concept of Haiguang Information is excellent.

The main business of Haiguang Information is the research and development, design, and sales of high-end processors, with core products including Haiguang General Processors and Haiguang Co-processors, which are CPUs and DCUs. Note that the former is benchmarked against Intel and AMD's CPU products, while the latter challenges NVIDIA's current dominant GPU products, widely used in fields such as big data and artificial intelligence.

Clearly, this has greatly stimulated the stock price of Haiguang Information.

In 2023, it soared by 239%, and this year it has surpassed NVIDIA's increase of over 180%, continuously setting new historical highs, and its market value has risen to the fifth position in the U.S. stock market. Therefore, as the "hope of the village," Haiguang Information, which can be benchmarked against it, naturally cannot concede.

In 2023, Haiguang Information's stock price surged by 77.2%; in 2024, the increase is close to 80%; if we talk about the maximum increase, Haiguang Information's maximum increase within the year exceeded 100%. Compared to the issue price, in just two short years, Haiguang Information's market value has skyrocketed by 200 billion.

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Secondly, Haiguang Information's stock price is not rising blindly; the room for imagination is indeed significant.

In 2019, Haiguang Information was included in the U.S. Export Administration Regulations; in August 2023, the U.S. President signed an executive order to strictly limit the export of cutting-edge technologies to China, involving semiconductors, artificial intelligence, and quantum technology. Therefore, under the concept of domestic substitution, whether willing or not, Haiguang Information is endowed with the expectation of breaking the monopoly.

Of course, Haiguang Information is also quite powerful.

In terms of CPUs, the domestic market is highly dependent on foreign countries, where the X86 architecture almost monopolizes the Chinese and global architecture licensing market, with Intel and AMD's market share exceeding 95%, and Haiguang Information is the only company in China capable of producing X86 chips.On the DCU front, the global mainstream artificial intelligence companies are currently using Nvidia's A100 products. The first generation of Hygon Information's DCU product, known as the Hygon Deep Computing No.1, is roughly equivalent to 50% of the A100's capabilities. However, the Deep Computing No.2, released in the third quarter of 2023, is officially stated to have doubled the performance compared to the No.1. In July of this year, the company responded that the development of the Deep Computing No.3 is progressing smoothly.

Although there are currently no authoritative comparative data, Hygon Information's continuous product iteration, coupled with its cost advantage, makes it promising as a substitute for Nvidia's A1100 product. Of course, when high-end intelligent chip sales are restricted, whether you like it or not, Hygon Information is the hope of the village.

Furthermore, Hygon Information has made significant R&D investments, truly deserving the "STAR Market" label.

From 2018 to 2021, Hygon Information's cumulative R&D investment exceeded its operating income; in 2022 and 2023, Hygon Information's R&D investments were 2.067 billion yuan and 2.81 billion yuan, respectively, accounting for more than 40% of the operating income; in the first three quarters of this year, Hygon Information's R&D investment was 2.168 billion yuan.

It can be seen that Hygon Information is fully committed to R&D.

Moreover, Hygon Information's profitability is also outstanding.

As is well known, many high-tech companies claim that huge R&D investments have led to a deterioration in profitability, or even negative profits. However, Hygon Information has performance to back it up.

From 2020 to 2023, Hygon Information's operating income grew from 1.022 billion yuan to 6.012 billion yuan, and net profit grew from -0.39 billion yuan to 1.263 billion yuan. In the first three quarters of this year, Hygon Information's operating income was 6.137 billion yuan, a year-on-year increase of 55.64%, and net profit was 1.526 billion yuan, a year-on-year increase of 69.22%.

Note that in the first three quarters of this year, both operating income and net profit have exceeded the full-year levels of 2023.

For such a company that is supported by national policies, has a sexy and imaginative track, is truly high-tech, and has excellent profitability, how can it not be sought after by the capital market? Even though the price-to-earnings ratio is already over 100 times, considering the company's growth potential and special status, when compared to Nvidia, this is just the tip of the iceberg.However, despite the truly outstanding fundamentals of Higuang Information, we must still caution about risks. Note that the optimistic expectations mentioned above have already been reflected in the stock price. Although Higuang Information is hailed as the "hope of the village," it is not the only hope; many companies, including HiSilicon, Loongson Technology Corporation, and Shanghai Zhaoxin, are its competitors. If any of their products come out on top, there is a strong possibility that the winner will take all. Additionally, processor development is extremely challenging, and the current market may not tolerate Higuang Information's research and development progress falling short of expectations. Furthermore, as the Sino-American rivalry deepens, although self-reliance to solve bottleneck issues has become a consensus, if the political winds suddenly shift, Nvidia could come on aggressively.

Financially, Higuang Information's performance is very impressive, but the surge in intangible assets due to the capitalization of research and development expenses is also a potential risk. In summary, when all investors believe that Higuang Information is sufficiently outstanding and when everyone's expectations are extremely consistent, the risk at the trading level could suddenly occur at any time.