GPU shares Illustration: Liu Xiangya/GT

Moore Threads, one of China's most closely watched GPU companies and described by some as a potential challenger to Nvidia, saw its shares fall 3.7 percent on Tuesday after a 20 percent drop a day earlier. The decline pushed its market capitalization below 200 billion yuan ($29.8 billion). Moore Threads was not alone. Shares of some other Chinese GPU companies have also fallen from their previous highs. The pullback has prompted a closer look at the progress of China's GPU industry.

Do these market moves reflect changing expectations for China's GPU companies?

The first question is what drove the decline. The immediate trigger for Moore Threads' decline was the release of 25.77 million shares from its IPO lock-up period. Before the release, the company had about 30.23 million tradable shares. That number rose to roughly 56 million after the newly unlocked shares became tradable, significantly increasing the supply available in the market.

The unlocked shares had been subject to a nine-month lock-up period. Given their relatively low entry price and the stock's substantial gains during the lock-up period, holders had accumulated sizable gains, creating a natural incentive to take profits once the shares became tradable. The resulting selling pressure was therefore largely a market-driven adjustment as previously restricted shares entered circulation.

The recent share volatility should be viewed separately from the company's operating performance. Moore Threads reported first-half revenue of 1.736 billion yuan, up 147 percent year on year. The company told Chinese media outlets that its operations remained on a positive trajectory, with continued advances in its GPU technology. A new product based on its "Huagang" architecture is expected to launch later this year.

Moore Threads may not be an isolated case. Some other Chinese hard-tech companies, including GPU firms, are also expected to face the expiration of lock-up periods, a factor the market sees as a potential source of short-term price volatility. Such fluctuations are common among newly listed technology companies as previously restricted shareholders are able to adjust their holdings. They should not, by themselves, be taken as a direct measure of an industry's long-term prospects.

It remains possible that China's GPU companies will continue to experience share price fluctuations. But for a young industry that has grown rapidly in recent years, such volatility is also part of the transition from start-up-driven expansion to a more mature market environment. Some companies in the sector were founded only a few years ago and are still building their businesses while learning to navigate public markets. 

Regardless of short-term market movements, IPOs have provided the industry with substantial capital to support continued investment in technology, strengthen the foundation for long-term growth and expand commercial opportunities.

Beyond the share price movements, the underlying momentum of China's GPU industry remains intact. Chinese GPU companies are continuing to improve their products, expand applications and build supporting ecosystems, laying the foundation for sustained market interest in the sector. As long as the industry continues to make progress in these areas, the underlying basis for market confidence will remain.

Chinese GPU companies still face gaps compared with the world's leading players, particularly in technology maturity and ecosystem development. But for an emerging industry, those gaps also represent room for continued improvement. As the sector evolves, each technological breakthrough and expansion into new applications has the potential to spark renewed market interest.

Some foreign media outlets have described Moore Threads' recent share price decline as a "reality check" for an "AI darling." But that may be reading too much into a short-term market move. The company's fundamentals have not changed, nor has the broader trajectory of China's GPU industry. A young technology sector that can withstand market volatility while continuing to advance is not a sign of weakness; it is part of the process of becoming a more mature industry.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn