Guosheng Securities has released a research report forecasting that Kingsoft Cloud Holdings Ltd (ASX: KC) will achieve revenues of 126, 155, and 194 billion yuan for the years 2026 through 2028, representing year-over-year growth rates of 32%, 23%, and 25%, respectively. Given the cloud computing industry's characteristics of high capital expenditure and asset intensity, the firm employed a price-to-sales (P/S) methodology for valuation. Taking into account the high-growth nature of the company's AI cloud business, its pure cloud business architecture, and its neutral third-party positioning, and with reference to comparable company valuations, a multiple of 2.5 times the 2026 earnings per share (EPS) was applied. This yields a target price of HK$8 or US$15. This represents the firm's inaugural coverage, and a "Buy" rating is assigned.
Core Investment Thesis
Kingsoft Cloud serves as the exclusive strategic cloud platform for the Xiaomi-Kingsoft ecosystem. The company completed a dual listing on the US stock market in 2020 and the Hong Kong market in 2022. It positions itself as a full-stack cloud service provider, covering the entire spectrum from IaaS and PaaS to MaaS, with deep expertise in verticals such as internet services, public services, digital health, and finance. The company is deeply integrated with two major ecosystem clients, KINGSOFT and Xiaomi Group. The annual caps for related-party cloud services are set at 46 and 68 billion yuan for 2026 and 2027, respectively, forming a solid foundation for its performance.
In response to the wave of AI industry development, the company has strategically upgraded its Xingliu platform from a resource management tool to a comprehensive, integrated platform for both AI training and inference. It is compatible with nearly 40 mainstream models and offers MaaS services. In the first quarter of 2026, revenue from intelligent computing already constituted over 50% of its public cloud revenue, indicating the company's transition from a traditional cloud provider to a full-stack AI service provider.
Industry Landscape and Trends
AI is propelling the global cloud market into a new phase centered on intelligent computing, intensifying the divergence between internet cloud providers and telecom operator cloud providers. Firstly, regarding market size, the global cloud computing market is projected to reach $692.9 billion in 2024, with the domestic Chinese market reaching 828.8 billion yuan. AI integration is expanding the boundaries of cloud services from the traditional IaaS-PaaS-SaaS stack to an intelligent computing system encompassing AIIaaS, AIPaaS, MaaS, and AISaaS. The computing power structure is rapidly concentrating on generative AI, with the proportion of inference scenarios continuously increasing.
Secondly, concerning competitive dynamics, internet cloud providers, leveraging their AI-native DNA driven by internal use and spillover effects along with full-stack product capabilities, are returning to a high-growth trajectory. Leading players like Alibaba Cloud and Baidu AI Cloud have seen a significant enhancement in their pricing power. Telecom operator clouds are maintaining their foundational business by relying on the integration of computing and networks and their entrenched resources in government and enterprise sectors, yet their market share continues to face pressure.
Looking ahead, internet cloud providers are expected to evolve towards monetizing more AI tokens, while telecom operator clouds will need to base their strategies on the domestic computing power ecosystem and the national integrated computing power network. They must seek a balance for high-quality development through vertical industry customization and market-oriented reforms.
Dual Growth Engines for Kingsoft Cloud
The dual engines for Kingsoft Cloud's core growth are the explosive demand for AI computing power within its ecosystem and the strategic upgrade of its Xingliu platform. On the demand side, Xiaomi Group's planned 60 billion yuan AI investment over the next three years, coupled with iterations of its MiMo model series and the deployment of Miclaw Agent, is driving sustained high growth in computing power demand across the entire chain of training, inference, and algorithm research. Concurrently, the company's customer base is expanding beyond ecosystem reliance to external sectors like internet services, autonomous driving, and AI for Science.
On the supply side, the Xingliu platform has completed its strategic upgrade from a resource management tool to a one-stop, full-process platform for AI training and inference. Leveraging differentiated capabilities such as embodied intelligence full-link simulation and unified management of multiple models via MaaS, it is facilitating the company's transformation from a traditional IaaS computing power supplier to a full-stack AI service provider. The integrated training-inference platform and MaaS services offer higher customer stickiness and added value. As AI applications achieve scale, the Xingliu platform is poised to become the core engine for sustained revenue growth in the intelligent computing cloud segment.
Key Risk Factors
Potential risks include weaker-than-expected demand within the ecosystem, slower-than-expected adoption of downstream AI applications, intense industry competition, and estimation inaccuracies in the financial projections.
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