Shanghai Stock Exchange: the AI boom shows no sign of slowing down; a stellar debut for Enflame (+179 per cent)

Enflame sold 43.04 million new shares, representing 10 per cent of its expanded share capital, on the Shanghai STAR Market, which focuses on technology.

The public tranche of the IPO was oversubscribed more than 6,000 times. At Friday’s closing price of 397 yuan, Enflame’s market capitalisation stands at around 171 billion yuan (approximately 22 billion euros), almost 2.8 times its valuation at the IPO price.

“At present, subscribing for new shares on the Class A share market is one of the few investment strategies capable of offering investors guaranteed returns,” commented Shen Meng, director of the boutique investment bank Chanson & Co, based in Beijing.

According to Shen Meng, businesses linked to Graphics Processing Units offer investors clearer growth prospects than some purely speculative stocks with weaker fundamentals, whilst US restrictions on China’s access to advanced chips have boosted interest in domestic alternatives.

Tencent is Enflame’s largest shareholder, with an 18 per cent stake following the offering, and is also the company’s biggest client. According to the prospectus, revenue linked to Tencent accounted for 84 per cent of Enflame’s 2025 revenue. However, the company has not yet turned a profit. In 2025, the net loss narrowed to 1.16 billion yuan compared with a loss of 1.51 billion yuan the previous year, whilst turnover rose by 37% to 990.2 million.

For the first nine months of 2026, the company estimates revenue of between 2.3 and 3 billion yuan, alongside an estimated net loss of between 700 and 860 million yuan. Enflame expects to break even or become profitable in 2026 or 2027, depending on revenue growth and margins.

Enflame designs chips used for training and inference in data centres dedicated to artificial intelligence, as well as developing its own software programming system.

According to the prospectus, the company intends to use the majority of the proceeds to develop fifth- and sixth-generation AI chips, the associated software and large-scale computing systems.

Enflame was founded in Shanghai in 2018 by former AMD employees Zhao Lidong and Zhang Yalin. Zhao is a US citizen and holds a long-term residence permit in China, as stated in Enflame’s IPO prospectus.