This analyst's top chip pick isn't flashy, but it could benefit from 'unprecedented' momentum

Cambricon Technologies Corp plans to more than triple its production of AI chips in 2026, aiming to wrest market share from Huawei Technologies Co. in China and fill a void left by Nvidia Corp.’s forced exit. The Beijing-based company is preparing to deliver half a million artificial intelligence accelerators in 2026, people familiar with the matter said.

That includes as many as 300,000 units of its most advanced Siyuan 590 and 690 chips, the people said, asking to remain anonymous discussing private targets. The company will rely primarily on Semiconductor Manufacturing International Corp.’s latest production process, known as “N+2” 7-nanometer, the people said.

The ramp-up at Cambricon underscores the rapid ascent of Chinese chipmakers after Beijing began actively discouraging the use of Nvidia’s product this year, part of a longer-term effort to wean the country off US technology. Huawei is also preparing to double the output of its most advanced artificial intelligence chips over the next year. And up-and-comer Moore Threads Technology Co. debuts Friday in Shanghai, showcasing its own ambitions to carve out a slice of the market.

Cambricon’s shares rose 2.8% in Shanghai, extending its gains just before the market closed Thursday. SMIC’s stock rose 3.9% in Hong Kong, while rival Hua Hong Semiconductor Ltd. climbed 3.1%.

Nvidia boss Jensen Huang said in November that his company is effectively blocked from China, which would spur the rise of more domestic competition from the likes of Huawei. And while the Trump administration is considering a plan to allow the sale of its H200 cards, there’s no guarantee Beijing won’t also hinder its adoption.

Few companies have benefited as visibly from that situation as Cambricon, which reported a 14-fold surge in its revenue in the September quarter — and a nine-fold leap in market value since 2021. It’s now on track to win new orders from some of China’s biggest AI spenders, including Alibaba Group Holding Ltd. in the coming years, the people said. The chip designer already counts ByteDance Ltd. as a primary customer, which accounts for more than 50% of all Cambricon’s orders right now, the people said.

Alibaba, ByteDance, Cambricon and SMIC representatives did not respond to emailed requests for comment.

Whether Cambricon will hit those targets depends in large part on not just the pace of AI development, but also its ability to secure capacity at SMIC — at a time Huawei and other rivals are also vying to place orders with China’s most advanced chipmaker.

For context, Cambricon will build just 142,000 AI chips this year, Goldman Sachs estimates. SMIC’s own technology may prove an obstacle. When it comes to Cambricon’s top-of-the-line 590 and 690 chips, the company is, for now, managing yields of just 20%, the people said.

That means about 4 out of 5 silicon dies — the basic components of a full chipset — are considered flawed and unusable. The top global contract chipmaker, Taiwan Semiconductor Manufacturing Co., now has an estimated yield of at least 60% with its latest 2-nanometer process, which is three generations or seven years ahead of SMIC’s technology, according to some analysts.

Another potential bottleneck is the supply of the high-bandwidth memory chips required to make AI accelerators. That technology remains a challenge for Chinese companies, which is why Huawei’s latest 910C AI accelerators still rely on memory chips from SK Hynix Inc. and Samsung Electronics Co.

Foreign investors may shift more funds toward India as the popular Artificial Intelligence (AI) trade in the US, Taiwan and Korea appears stretched, according to Harald van der Linde, Head of Asia Equity Strategy at HSBC.

“I think the AI story can continue,” van der Linde said, but he noted that positioning in key semiconductor markets has become heavy. Stocks such as SK Hynix and Taiwan Semiconductor Manufacturing Company (TSMC) are already large positions in major Asian and emerging market portfolios. Investors may now ask “how much more can you really buy?” he said, which could open the door for more capital to move to other Asian markets.

India could be a key beneficiary. “My suspicion is that as we go into 2026, that foreign investors increasingly going to put India back onto their radar screens,” van der Linde said. He pointed out that Indian equity valuations have become more attractive after the market cooled over the past 18 months, particularly when measured in US dollar terms due to the weaker rupee. As a result, “India is clearly starting to offer good value,” he added.

Currency dynamics could support the shift. The US Federal Reserve has not yet cut interest rates, while India has entered a rate-cutting cycle. If the US starts to ease policy, possibly later this year or in 2026, it could limit further rupee weakness. Van der Linde said foreign investors may then feel “it’s not so bad to go back into India and have that rupee exposure,” along with better entry prices for Indian stocks.

Global monetary policy remains an important factor for market flows. A new US Fed Chair is expected to continue rate cuts, although van der Linde cautioned against aggressive moves that could repeat inflation problems seen in the 1970s.

Japan’s interest rate path may also influence Asia’s investment outlook. Japan is one of the few major economies raising rates due to a tight labour market. A stronger yen may not support Japanese equities but could push Japanese and Korean savers to redirect money elsewhere in the region. Van der Linde said this combination of US easing and Japan tightening could help India attract more foreign capital as 2026 approaches.

ServiceTitan TTAN is set to report third-quarter fiscal 2026 results on Dec. 4, 2025.

The company expects fiscal third-quarter revenues between $237 million and $239 million. The Zacks Consensus Estimate for revenues is pegged at $238.45 million, suggesting growth of 19.66% from the figure reported in the year-ago quarter.

The consensus mark for earnings has remained at 15 cents per share over the past 30 days, indicating a year-over-year increase of 133.33%.

ServiceTitan Inc. Price and EPS Surprise

ServiceTitan Inc. price-eps-surprise | ServiceTitan Inc. Quote

Let’s see how things have shaped up for this announcement.

Factors Likely to Influence Q3 Results

Gross transaction volume (GTV) increased 19% year over year to $22.9 million in the second quarter of fiscal 2026. The company benefited from new user growth and usage revenues (up 23% year over year in the second quarter of fiscal 2026), trends that are expected to have benefited GTV and subscriptions revenues in the to-be-reported quarter. 

Growing traction of ServiceTitan’s AI, Titan Intelligence, is expected to have boosted top-line growth. Strong demand for pro products bodes well for TTAN’s growth in the to-be-reported quarter. Increasing automation needs of ServiceTitan’s customers are expected to have driven top-line growth.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the exact case here.

TTAN has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few stocks worth considering, as our model shows that these have the right combination of elements to beat earnings in their upcoming releases:

Micron MU currently has an Earnings ESP of +2.46% and a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Micron shares have jumped 140.8% in the past 12-month period. Micron is slated to report its first-quarter fiscal 2026 results on Dec. 17.

Broadcom AVGO currently has an Earnings ESP of +0.71% and a Zacks Rank #3 at present.

Broadcom shares have jumped 129.6% in the past year. Broadcom is set to report fourth-quarter fiscal 2025 results on Dec. 11.

Dollar General DG currently has an Earnings ESP of +3.35% and a Zacks Rank #3 at present.

Dollar General shares have jumped 38.3% in the past year. Dollar General is set to report third-quarter fiscal 2025 results on Dec. 4.

This article originally published on Zacks Investment Research (zacks.com).

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