Kingsoft Cloud Holdings Limited (KINGSOFT CLOUD) (03896)

Equity Research Report | Industry: Cloud Computing Infrastructure, AI Computing and Industry Cloud Services | Report Date: September 13, 2026 | As of the close of trading on September 11, 2026; valuation currency is Hong Kong dollars (HKD). Certain trading-volume and technical-indicator figures are based on public data or estimates recalculated from closing prices; specific uncertainties are described in the relevant sections.

This report was automatically compiled by AI based on publicly available information and is for reference only. It does not constitute investment advice.

1. Executive Summary

Kingsoft Cloud (03896.HK) has seen a clear acceleration in business growth, but remains at the stage of “revenue expansion without GAAP net profitability.” Revenue for the first half of 2026 was RMB 5.7757 billion, up 33.7% year on year, while net loss attributable to shareholders narrowed to RMB 436.9 million. Public cloud revenue was RMB 4.3539 billion, up 46.2%, while enterprise cloud revenue was RMB 1.4218 billion, up 6.1%. Second-quarter 2026 revenue was RMB 3.0720 billion, up 30.8% year on year. The company achieved a GAAP operating profit of RMB 23.0 million for the first time, although it still recorded a quarterly net loss of RMB 93.0 million.

Growth was mainly driven by demand for AI infrastructure and MaaS. In the second quarter of 2026, total AI cloud billings reached RMB 1.327 billion, up 82% year on year and accounting for 56% of public cloud revenue. However, AI expansion also increased depreciation of servers and network equipment. Gross margin declined to 14.1% in the first half of 2026 from 15.2% in the same period of the prior year, indicating that revenue growth has not yet fully translated into gross-margin improvement. Capital expenditure reached RMB 4.9943 billion in 2025 and increased further to RMB 3.3 billion in the second quarter of 2026. Cash and cash equivalents declined from RMB 6.0180 billion as of December 31, 2025 to RMB 4.6743 billion as of June 30, 2026. Capital investment and cash consumption are key areas to monitor.

The company has some customer and revenue concentration. In 2025, cloud-service revenue from Xiaomi Group was RMB 2.2355 billion, accounting for approximately 23.4% of total revenue. Combined cloud-service revenue from Xiaomi and Kingsoft Software Group related parties was RMB 2.6201 billion, accounting for approximately 27.4% of total revenue. The company also relies substantially on the procurement and leasing of infrastructure. Net accounts receivable amounted to RMB 1.7405 billion in 2025, with changes in accounts receivable tying up RMB 459.4 million of operating cash flow. In terms of profitability, market forecasts indicate that the company will remain loss-making in 2026. Although it is expected to approach or achieve profitability in 2027–2028, the forecast range is wide, reflecting significant disagreement over the pace of AI revenue growth, depreciation and amortization, and margin improvement.

At the close of trading on September 11, 2026, the share price was HKD 5.16, down from HKD 5.70 on September 4 and below the MA5, MA10 and MA20, indicating a weak short-term technical structure. The share price was close to the lower Bollinger Band of approximately HKD 5.10. STOCHRSI and Williams %R were in oversold territory, but the RSI was approximately 38.934 and MACD remained below the zero line, which was insufficient to confirm a trend reversal. Technically, HKD 5.05–5.20 is the recent support area to monitor, while HKD 5.35–5.60 is the main rebound resistance zone. Trading volume on September 11 was approximately 7.15 million shares, well below the average of approximately 34.75 million shares over the preceding five trading days. This suggests that selling pressure has temporarily eased, but active buying support remains insufficient.

2. Company Overview

2.1 Basic Information

2.2 Core Businesses and Product Portfolio

• Public cloud services: Cloud computing, cloud servers, cloud storage, databases, networks, CDN, cloud security, data processing and artificial-intelligence computing, among others
• Industry cloud services: Customized cloud platforms, solutions and delivery services for vertical industries including the internet, finance, healthcare, public services and enterprise services
• Intelligent computing cloud and AI cloud services: AI training, inference, model APIs, model management, data processing and deployment of large-model applications
• Cloud digitalization solutions and services: Helping customers migrate IT infrastructure to the cloud, manage data and complete business digital transformation

2.3 Position in the Industry Chain and Cost–Profit Structure

Kingsoft Cloud is positioned in the middle-to-downstream portion of the cloud-computing industry chain. It connects suppliers of servers, GPUs, storage, IDC, electricity, bandwidth and network equipment, and is responsible for cloud-infrastructure operations, computing-resource scheduling, cloud-native platforms and data services. It provides standardized cloud services and industry solutions to internet, government, financial, healthcare, enterprise and AI-application customers.

• Resources actually procured and leased include servers and AI-computing equipment, GPUs and related accelerator cards, storage equipment, network equipment and network consumables, as well as IDC facilities, electricity, bandwidth and rack resources.
• Upstream supplier categories include internet data-center operators, telecommunications operators, server suppliers and network-consumables suppliers. The company also needs to invest in R&D, technical delivery and cloud-operations personnel.
• As of December 31, 2025, the total remaining purchase commitments under two irrevocable internet data-center service agreements signed by the company amounted to RMB 1.280 billion, of which RMB 587.2 million represented purchase commitments still to be fulfilled in the future.
• The company has a degree of procurement scale and conducted price negotiations and cost controls with IDC service providers in 2025. However, it remains vulnerable to changes in upstream prices and supply when GPUs, servers, data centers, electricity and bandwidth resources are constrained.
• The company relies primarily on the procurement and leasing of data centers, servers and network resources, rather than fully owning self-built data centers and all computing equipment. It is therefore highly sensitive to server costs, IDC costs, depreciation and lease costs.
• Customers include internet platforms and content companies, financial institutions, healthcare institutions, public-service and government customers, enterprise customers, as well as emerging AI-application customers in areas such as AI-model development, autonomous driving and robotics.
• The company adopts a “high-quality customer strategy.” As of December 31, 2025, it had 473 high-quality customers, including 216 high-quality public-cloud customers and 273 high-quality industry-cloud customers. Some customers may use both types of services.
• Average revenue per high-quality public-cloud customer was approximately RMB 30.3 million, while average revenue per high-quality industry-cloud customer was approximately RMB 10.4 million.
• In 2025, public-cloud and industry-cloud services provided to Xiaomi Group totaled RMB 2.2355 billion, accounting for approximately 23.4% of total revenue. Related services provided to Kingsoft Software Group totaled RMB 384.6 million. Combined cloud-service revenue from Xiaomi and Kingsoft Software Group related parties was approximately RMB 2.6201 billion, accounting for approximately 27.4% of total revenue.
• The above concentration figures reflect the 2025 related-party transaction disclosure and do not represent the revenue share of the top five customers in the strict sense. The research memorandum states that the main verifiable materials do not fully present the revenue share of the top five customers. Xiaomi and Kingsoft Software are major shareholders or related parties and cannot simply be treated as ordinary external customers. The precise top-five customer ratio should be based on the company’s complete 20-F or subsequent announcements.
• Industry-cloud projects have relatively strong customization and delivery characteristics, which may lead to higher customer stickiness, but also involve longer delivery cycles, higher labor input and customer bargaining pressure. Standardized cloud services are affected by competition over price, stability, security and service quality.
• As of December 31, 2025, net accounts receivable was RMB 1.7405 billion, equivalent to approximately 18.2% of 2025 revenue; accounts payable was RMB 2.0145 billion, equivalent to approximately 25.0% of operating costs; and customer advances were RMB 270.4 million. Changes in accounts receivable tied up RMB 459.4 million of operating cash flow in 2025, while changes in accounts payable contributed RMB 292.1 million of cash flow. Related-party trade receivables were RMB 573.4 million, including RMB 455.8 million from Xiaomi Group. Related-party trade payables were RMB 2.3148 billion, including RMB 2.3098 billion to Xiaomi Group, mainly related to the purchase of network hardware equipment from Xiaomi, financing and supply-chain arrangements and other related-party transactions. These payables should not be directly regarded as credit financing from ordinary external suppliers.
• The 2025 disclosure shows that combined cloud-service revenue from Xiaomi and Kingsoft Software Group related parties accounted for approximately 27.4% of total revenue, while Xiaomi alone accounted for approximately 23.4%. These figures are sourced from the annual report’s related-party transaction disclosure and cannot replace top-five customer concentration data. The company did not fully disclose the revenue share of its top five customers in the verifiable materials available for this report. The data sources and definitions have limitations, and the latest annual report or announcement should prevail.

Kingsoft Cloud is closer to a midstream service provider combining “technology platform + infrastructure operations + industry delivery” than to an upstream, highly bargaining-powerful player controlling core chips, GPUs or data-center resources. It is also not a terminal platform with a powerful consumer brand. Further profit improvement will depend mainly on AI training and inference demand, computing-resource utilization, control of GPU and server depreciation and IDC costs, the contraction of low-margin businesses such as CDN, and a higher contribution from higher-margin AI platforms, model APIs and industry solutions.

3. Financial Data and Valuation Analysis

3.1 Recent Operating Performance

Financial data are disclosed under U.S. GAAP, and all amounts are denominated in RMB. Public-cloud services revenue in the first half of 2026 was RMB 4.3539 billion, up 46.2% year on year; enterprise-cloud services revenue was RMB 1.4218 billion, up 6.1% year on year.

Kingsoft Cloud’s revenue growth reaccelerated in the first half of 2026, driven mainly by AI-related customer demand, public cloud and intelligent-computing businesses. Public-cloud revenue grew significantly faster than enterprise-cloud revenue. Operating loss narrowed from RMB 561.2 million in the same period of 2025 to RMB 143.1 million. Non-GAAP adjusted operating profit was RMB 64.14 million, while normalized adjusted operating profit after excluding gains from the disposal of property and equipment was approximately RMB 29.12 million. The company achieved positive GAAP operating profit for the first time in the second quarter. However, gross margin declined from 15.2% in the same period of 2025 to 14.1%, mainly due to increased depreciation of servers and network equipment resulting from AI-business expansion. The company has still not achieved GAAP net profitability. Adjusted EBITDA was RMB 1.8480 billion, up 155.0% year on year, but should not be used alone as a substitute for net profit when assessing profitability.

3.2 Earnings Forecasts

Earnings and EPS figures are based on 11 broker reports aggregated by etnet around the end of August 2026. Revenue forecasts are primarily from Guosheng Securities and represent a single-institution forecast, not a multi-institution consensus estimate. The wide earnings forecast ranges for 2027–2028 reflect significant disagreement among institutions over AI-cloud revenue growth, capital expenditure, depreciation and amortization, and the pace of margin improvement.

3.3 Valuation and Institutional Ratings

At approximately 10:03 HKT on September 10, 2026, the intraday Hong Kong share price was approximately HKD 5.250, versus a previous closing price of HKD 5.325, representing an intraday decline of approximately 1.41%. Market capitalization was approximately HKD 23.792 billion. This was an intraday figure rather than the final closing price. As the company is expected to remain loss-making in the latest period and in 2026, current P/E and 2026 forecast P/E are not applicable. Although profitability is expected in 2027 and 2028, EPS is forecast at only RMB 0.008 and RMB 0.0312, respectively, meaning forecast P/E may be high and is unsuitable as a standalone valuation basis. Using 2025 revenue of RMB 9.5586 billion and the current market capitalization of HKD 23.792 billion, the price-to-sales ratio is roughly around 2x, although the comparison between RMB revenue and HKD market capitalization involves foreign-exchange conversion and is for approximate reference only. The 11 institutional target prices range from HKD 8.32 to HKD 13.00, with a simple arithmetic average of approximately HKD 10.90. Relative to the current price of HKD 5.25, the minimum, average and maximum target prices imply mechanical potential upside of approximately 58%, 108% and 148%, respectively. The company’s current valuation depends primarily on AI-cloud revenue growth, stabilization of gross margin and margin improvement. GAAP net profit has not yet turned positive, while depreciation and amortization, interest expense, future financing and earnings disappointments could all lead to valuation and target-price cuts.

4. Recent News and Announcements

4.1 September 4, 2026: Monthly Return of Equity Issuer Shows Stable Share Capital

As of August 31, 2026, the authorized/registered number of ordinary shares was 40,000,000,000, with a par value of USD 0.001 per share and authorized/registered share capital of USD 40,000,000. Issued ordinary shares totaled 4,531,784,801, treasury shares totaled 0, and the total number of issued shares was unchanged from July 31, 2026. No new issuance or reduction of issued shares, share repurchases, share cancellations or other share-capital changes occurred in August 2026. The company confirmed compliance with applicable public-float requirements. Source: HKEXnews (https://www1.hkexnews.hk/listedco/listconews/sehk/2026/0904/2026090401511.pdf)

4.2 August 19, 2026: Second-Quarter Revenue and AI-Cloud Business Grew Rapidly

For the three months ended June 30, 2026, Kingsoft Cloud’s total revenue was RMB 3,072.0 million, up 30.8% year on year and 13.6% from the first quarter of 2026. Public-cloud services revenue was RMB 2,357.6 million, up 45.1% year on year and 18.1% sequentially. Enterprise-cloud services revenue was RMB 714.3 million, down 1.3% year on year and up 1.0% sequentially. Total AI-cloud billings were RMB 1,327 million, up 82% year on year and accounting for 56% of public-cloud revenue. Growth was mainly driven by AI infrastructure services and the Model-as-a-Service (MaaS) business. The above data are unaudited and prepared under U.S. GAAP. Source: HKEXnews (https://www1.hkexnews.hk/listedco/listconews/sehk/2026/0819/2026081900929.pdf)

4.3 August 19, 2026: Gross Margin and Operating Profit Improved, but Net Loss Persisted

Second-quarter 2026 gross profit was RMB 466.2 million, up 37.6% year on year. Gross margin was 15.2%, compared with 14.4% in the same period of 2025 and 12.8% in the first quarter of 2026. Operating profit was RMB 23.0 million, versus an operating loss of RMB 327.0 million in the same period of 2025 and RMB 166.1 million in the first quarter of 2026. Non-GAAP operating profit was RMB 124.0 million, with a non-GAAP operating margin of 4.0%. Second-quarter net loss was RMB 93.0 million, narrowing 79.6% year on year and 72.9% sequentially. Non-GAAP net loss was RMB 59.8 million, compared with RMB 300.5 million in the same period of 2025 and RMB 237.1 million in the first quarter of 2026. Source: HKEXnews (https://www1.hkexnews.hk/listedco/listconews/sehk/2026/0819/2026081900929.pdf)

4.4 Increased AI-Computing Investment Makes Capital Expenditure and Cash Consumption Key Areas to Monitor

Capital expenditure in the second quarter of 2026, including assets capitalized through leasing arrangements, was RMB 3.3 billion, an increase from the first quarter of 2026, mainly related to investment in AI-computing resources. As of June 30, 2026, cash and cash equivalents were RMB 4,674.3 million, down from RMB 6,018.0 million as of December 31, 2025. The company explained that the main reason was increased investment in the procurement of computing equipment. The company achieved positive GAAP operating profit for the first time but remained loss-making at the net-profit level. The cash-flow and earnings pressure arising from higher investment in and depreciation of AI-computing equipment requires continued monitoring. The above data are unaudited. Source: HKEXnews (https://www1.hkexnews.hk/listedco/listconews/sehk/2026/0819/2026081900929.pdf)

4.5 July 17, 2026: Restricted Stock Units Granted to 438 Employees

The company granted a total of 16,220,972 restricted stock units (RSUs) to 438 employees, representing 16,220,972 ordinary shares, or approximately 0.36% of the company’s issued shares at the time. The grant price was HKD 0.01 per share, while the Hong Kong closing price on the grant date was HKD 4.92 per share. The grantees did not include directors, the chief executive officer, major shareholders or their related parties. Vesting conditions were linked to individual performance assessments. The arrangement constituted employee incentives rather than an increase in holdings by major shareholders. No new shares were issued under the 2026 share incentive plan during the month ended August 31, 2026. Source: HKEXnews (https://www1.hkexnews.hk/listedco/listconews/sehk/2026/0717/2026071701457.pdf)

4.6 Repurchases, Shareholder-Interest Changes and Major Transactions: No New Execution or Disclosure Identified as of September 13, 2026

The monthly return of securities movements for the period ended August 31, 2026 showed that the company did not repurchase shares in August 2026, held 0 treasury shares, had no change in the number of issued shares and recorded no share cancellations. Documents relating to the annual general meeting held on June 30, 2026 sought shareholder approval for a general mandate to repurchase shares and/or American depositary shares. However, existing disclosures support only the conclusion that repurchase authorization was approved, not that repurchases were actually executed. As of September 13, 2026, no September 2026 announcements were identified regarding major-shareholder purchases or disposals, changes in directors’ shareholdings, independent profit warnings, positive profit alerts, major acquisitions, asset disposals, joint-venture arrangements, major asset restructurings, HKEX disciplinary actions, regulatory actions by the Securities and Futures Commission or major regulatory penalties. The statement that nothing was “identified” means only that no relevant disclosure was found within the scope of this search; it does not exclude information that had not yet been announced, was disclosed through other market participants or was subsequently supplemented. Source: HKEXnews (https://www1.hkexnews.hk/search/titlesearch.xhtml?category=0&market=SEHK&stockId=1000180012)

5. Share-Price Performance and Technical Analysis

5.1 Price Overview

5.2 Technical Indicators

Kingsoft Cloud (03896.HK) closed at HKD 5.16 on September 11, 2026, a clear decline from HKD 5.70 on September 4. The closing price was below the MA5, MA10 and MA20, indicating a weak short-term moving-average structure. The share price was close to the lower Bollinger Band of approximately HKD 5.10. STOCHRSI and Williams %R were in oversold territory, creating conditions for a technical rebound, but RSI at approximately 39 and MACD in negative territory were insufficient to confirm a trend reversal. Trading volume on September 11 was approximately 7.15 million shares, significantly below the average of approximately 34.75 million shares over the latest five trading days. The decline on lower volume suggests that selling pressure has temporarily eased, but active buying support remains insufficient. Overall, the stock is in a short-term range between the HKD 5.05–5.20 support area and the HKD 5.35–5.60 rebound-resistance area. Future performance should be assessed together with the closing price, trading volume and changes in Southbound capital.

5.3 Short-Term Outlook (Next Week, Scenario Analysis for Reference Only)

⚠️ Risk warning: The following content is a subjective scenario analysis based on the closing data, historical prices and technical indicators as of September 11, 2026. It does not constitute investment advice or a definitive forecast of future prices.

① Key Technical Levels

② Scenarios for the Coming Week (Subjective Weighting, Not Statistical Probabilities)

• Weak range-bound consolidation (relatively higher weight, approximately 60%; a subjective heuristic weighting based on the current technical and capital-flow picture, not a statistical probability): Price range of approximately HKD 5.05–5.45. Trigger conditions include holding HKD 5.05–5.10, trading volume remaining near or below the recent average, and failure to break HKD 5.35–5.45 effectively. Under this scenario, the stock may fluctuate repeatedly at lower levels, with technical rebounds alternating with selling by investors seeking to exit at breakeven or take profits.
• Weak downside move (medium weight; a subjective scenario judgment, not a statistical probability): Price range of approximately HKD 4.50–5.05. Trigger conditions include an effective closing-price break below HKD 5.05, volume clearly exceeding the recent average during the break, and continued consecutive net selling by Southbound capital or simultaneous weakness in cloud-computing, AI and technology stocks. If HKD 5.05 fails, the stock may first test the round-number level of HKD 5.0 and then seek support around HKD 4.5. A high-volume break below HKD 4.5 could bring the stock closer to the 52-week low of HKD 4.22.
• Stronger rebound (low-to-medium weight; a subjective scenario judgment, not a statistical probability): Price range of approximately HKD 5.45–5.80, with a test of around HKD 6.05 under a strong scenario. Trigger conditions include a return above HKD 5.35–5.45, followed by recovery of HKD 5.55–5.60, representing the MA20 and recent resistance area, together with a clear increase in volume and upside-day volume no lower than the recent average. If the stock stabilizes above HKD 5.60 on higher volume, the technical pattern may shift from an oversold rebound toward short-term trend repair. A further break above HKD 5.80 could create an opportunity to test the upper Bollinger Band near HKD 6.05, although continuation would still require support from trading volume and Southbound capital.

③ Capital and Liquidity Background

As of September 11, 2026, the market data showed daily trading volume of approximately 7.15 million shares. Based on total share capital of approximately 4.5318 billion shares, the turnover rate was approximately 0.16%. Average volume over the latest five trading days was approximately 34.75 million shares, while average daily turnover estimated using each day’s closing price was approximately HKD 187 million. Cumulative net selling through Stock Connect over the latest five trading days was approximately 10.676 million shares, although this capital-flow data was as of September 7, 2026. In shareholder disclosures, Kingsoft Software Limited held approximately 1.493 billion shares, or approximately 32.94%, with the last filing date of October 2, 2025; interests related to Xiaomi Group and Lei Jun totaled approximately 466 million shares, or approximately 10.29%, disclosed on March 25, 2026; and The Bank of New York Mellon Corporation held approximately 326 million shares, or approximately 7.20%, filed on June 24, 2026. These three disclosed interests add up to approximately 50% of total share capital, but this cannot be used to fully calculate the concentration of the true top-ten shareholder group. The interest held by The Bank of New York Mellon Corporation may include custodian or nominee holdings, and the disclosures may be lagged; the actual structure may have changed. Public research memoranda did not confirm whether public funds, social-security funds or QFII and other mainstream institutions were among the top ten shareholders, so no such inference is made. In actual trading, if liquidity does not recover sufficiently, the HKD 5.1–5.5 range may experience relatively pronounced order-book fluctuations and slippage.

If daily volume remains above approximately 50 million shares during the coming week, turnover broadly exceeds HKD 250 million, and the share price recovers HKD 5.45–5.60 on a closing basis, this could be viewed as confirmation from trading volume that short-term capital has become active again. If volume increases while the share price still breaks below HKD 5.05, this would more likely indicate intensified selling pressure during a decline rather than effective capital inflow.

④ Points to Monitor (Observation Framework Only, Not Trading Instructions)

• Observe whether the HKD 5.05–5.10 area can stabilize on lower volume, and do not equate a one-day rebound directly with a trend reversal.
• Observe whether the dense moving-average area of HKD 5.35–5.60 can be effectively recovered, focusing particularly on the closing price rather than a brief intraday break.
• Observe whether trading volume can recover to above approximately 50 million shares while being accompanied by a higher close.
• Observe whether Stock Connect capital can end consecutive net selling and resume consecutive net buying, while recognizing the reporting lag in Stock Connect data. These are observation points only, not trading instructions.

The above scenario analysis is based on closing data as of September 11, 2026 and calculations using historical prices and technical indicators. Short-term share prices may also be affected by news flow, capital flows, the broader market environment, Hong Kong market liquidity and company announcements. Technical indicators themselves have lagging effects and limitations. This analysis does not guarantee future actual performance and does not constitute a buy or sell recommendation. Investors should make independent judgments based on the latest market information and bear investment risks themselves.

6. Industry Landscape and Competitor Analysis

6.1 Industry Status

China’s public-cloud and AI-cloud markets feature coexistence among leading internet cloud providers, telecommunications-operator clouds, and specialized and vertical cloud-service providers. IDC analysis indicates that the year-on-year growth rate of China’s public-cloud IaaS market recovered to 20.0% in the second half of 2025, while the overall public-cloud market exceeded RMB 200 billion for the first time. AI is shifting competition from traditional computing, storage and network resources toward full-stack capabilities spanning chips, computing clusters, models, platforms and industry applications.

6.2 Competitive Landscape

• Key competitive dimensions include the scale of computing resources and GPU supply, data-center and network coverage, cloud-native and database technologies, AI training and inference capabilities, government and enterprise customer acquisition, and industry solutions and delivery capabilities.
• Price, stability, security, service quality, ecosystems and customer migration costs are also important competitive factors.
• Kingsoft Cloud’s relative advantages include its Xiaomi and Kingsoft Software ecosystem customer base, experience in video, gaming, internet and industry-cloud scenarios, integrated capabilities spanning cloud infrastructure, industry solutions and delivery services, and rapid growth in AI intelligent-computing business.
• Relative weaknesses include its smaller overall scale than Alibaba Cloud, Tencent Cloud, Huawei Cloud and operator clouds; its substantial reliance on infrastructure procurement and leasing; the large capital expenditure required for AI expansion; and its sensitivity to depreciation and IDC costs.
• The high contribution of Xiaomi and Kingsoft Software ecosystem revenue, customer concentration and related-party transaction dependence require continued monitoring. The company has not fully escaped losses, and earnings quality depends on the scaling of AI business and improved resource utilization.
• Industry market share varies according to whether the statistical definition covers IaaS, comprehensive cloud services, AI cloud or the overall public-cloud market. This memorandum does not use specific Kingsoft Cloud market-share figures that have not been cross-verified through formal company or IDC documents.

6.3 Major Competitors

Kingsoft Cloud’s core positioning is a midstream cloud-service provider developing “AI intelligent computing + industry cloud + ecosystem cloud” in parallel. Compared with leading internet cloud providers, it is smaller in scale and ecosystem. Compared with operator clouds, it has weaker network resources and government and enterprise channels. Compared with the more AI-oriented Baidu AI Cloud, it emphasizes data-center and cloud-infrastructure operations, the Xiaomi and Kingsoft Software ecosystems, and integrated services from computing resources through deployment and delivery. Whether these competitive advantages can translate into profitability will depend on AI-business scale, computing-resource utilization, customer mix and infrastructure-cost control.

7. Risk Factors

• High growth in AI-cloud business does not necessarily equate to earnings growth. Total AI-cloud billings in the second quarter of 2026 were RMB 1.327 billion, up 82% year on year, but AI-infrastructure expansion also increased depreciation of servers and network equipment, causing first-half 2026 gross margin to decline to 14.1%. If computing-resource utilization improves less than expected, revenue growth may continue to be accompanied by margin pressure.
• Capital expenditure and cash consumption may increase financial pressure. Capital expenditure was RMB 4.9943 billion in 2025 and reached RMB 3.3 billion in the second quarter of 2026. Over the same period, cash and cash equivalents declined from RMB 6.0180 billion to RMB 4.6743 billion. If computing-resource expansion continues while operating cash flow fails to improve sufficiently, future financing, asset depreciation or liquidity pressure may increase.
• The company has relatively high revenue dependence on the Xiaomi and Kingsoft Software ecosystems. Xiaomi-related cloud-service revenue was RMB 2.2355 billion in 2025, accounting for approximately 23.4% of total revenue. Combined cloud-service revenue from Xiaomi and Kingsoft Software Group related parties was RMB 2.6201 billion, accounting for approximately 27.4% of total revenue. Changes in related-party demand, procurement arrangements or business-cooperation terms could materially affect revenue scale and customer mix.
• Accounts receivable and related-party transaction structures require continued monitoring. Net accounts receivable was RMB 1.7405 billion in 2025, and changes in accounts receivable tied up RMB 459.4 million of operating cash flow. Related-party trade receivables were RMB 573.4 million, including RMB 455.8 million from Xiaomi Group. If collection periods lengthen or customer settlement arrangements change, working capital may be tied up further.
• The company relies substantially on the procurement and leasing of infrastructure and is sensitive to upstream resource costs. As of December 31, 2025, the total remaining purchase commitments under two irrevocable internet data-center service agreements were RMB 1.280 billion, including RMB 587.2 million of purchase commitments still to be fulfilled in the future. Changes in the prices or supply of GPUs, servers, IDC, electricity and bandwidth resources could affect costs, delivery capabilities and gross margin.
• Enterprise-cloud business growth is relatively weak. Enterprise-cloud revenue was RMB 1.4218 billion in the first half of 2026, up 6.1% year on year. Second-quarter enterprise-cloud revenue was RMB 714.3 million, down 1.3% year on year. If industry-cloud projects have long delivery cycles, customer bargaining pressure persists or customization investment increases, overall margin improvement may be constrained.
• The company has not achieved GAAP net profitability, and market earnings forecasts vary widely. The 2026 consensus forecast is for a net loss of RMB 645.4 million, with a range from a net loss of RMB 309.0 million to RMB 1.0565 billion. The 2027 forecast range runs from a loss of RMB 1.020 billion to a profit of RMB 377 million. If AI revenue, capital expenditure or depreciation and amortization assumptions fall short, the timing of the return to profitability and valuation assessments may be revised downward further.
• The technical picture remains weak and Hong Kong market liquidity is uncertain. The closing price of HKD 5.16 on September 11, 2026 was below the major short-term moving averages, while volume of approximately 7.15 million shares was below the approximately 34.75 million-share average over the preceding five trading days. If support around HKD 5.05 fails, the stock could technically move toward HKD 4.50 or even the 52-week low of HKD 4.22. Southbound capital recorded cumulative net selling of approximately 10.676 million shares, or approximately HKD 63.90 million, over the latest five trading days, and short-term buying support remains unstable.

8. Conclusion and Outlook

Kingsoft Cloud’s core growth thesis lies in the expansion of AI intelligent computing, public cloud and MaaS, supported by the Xiaomi and Kingsoft Software ecosystems and by internet, financial, healthcare and enterprise customer scenarios. The company aims to improve computing-resource utilization and expand cloud-service revenue. Public-cloud revenue growth significantly exceeded enterprise-cloud growth in the first half of 2026, and the return to positive GAAP operating profit in the second quarter suggests that scale growth and expense control have begun to improve operating leverage. If demand for AI training, inference and model services continues, the company may achieve further revenue growth and gradually improve operating profitability.

However, earnings realization still depends on whether revenue growth can cover the costs of servers, GPUs, network equipment, IDC and depreciation. Capital expenditure in the second quarter of 2026 was RMB 3.3 billion, while cash reserves declined by RMB 1.3437 billion from the end of 2025. At the same time, the company has not achieved GAAP net profitability, enterprise-cloud revenue growth remains relatively slow, and 2025 gross margin declined by 1.5 percentage points from 2024. The 2026 market consensus still forecasts a net loss of RMB 645.4 million, while the 2027 consensus forecast is for net profit of only RMB 9.0 million. The certainty of the earnings inflection remains limited.

From a market-performance perspective, the share price is at a relatively low level within its 52-week range of HKD 4.22–9.75, and the technical picture currently indicates weak range-bound decline. Investors should monitor whether HKD 5.05–5.10 can stabilize and whether the share price can recover the HKD 5.35–5.60 dense moving-average area with volume support. A high-volume break below HKD 5.05 could lead to a decline toward HKD 4.50 or even a retest of the 52-week low. Fundamentally, key indicators include AI-cloud billings and public-cloud growth, gross margin, capital expenditure, cash flow, the proportion of related-party revenue and improvement in GAAP net profit.

Data Sources

• https://ir.ksyun.com/system/files-encrypted/nasdaq_kms/assets/2026/04/23/6-23-23/HKEX-EPS_20260423_12118317_0.pdf
• IDC - Behind the Public-Cloud IaaS Market’s Return to 20% Growth: Who Will Capture the AI Dividend?
• www.sec.gov
• Kingsoft Cloud Announces Unaudited Second Quarter 2026 Financial Results
• Kingsoft Cloud Holdings Ltd_December 31, 2025
• 03896 Kingsoft Cloud - Free Real-Time Stock Quote - Earnings Forecast - etnet Hong Kong News, Financial Information and Lifestyle Platform
• Guosheng Securities: Initiates Kingsoft Cloud (03896) at “Buy”; Ecosystem and Platform to Drive Dual-Engine Growth
• Broker Ratings丨Daiwa: Raises Kingsoft Cloud Target Price to HKD 13, Reiterates “Buy” Rating
• https://content.etnet.com.hk/content/cpyrevamp/sc/stock_quote.php?code=03896&utm_source=openai
• Kingsoft Cloud (03896) Stock Price, Real-Time Data, News and Financials - Sina Finance
• Listed Company Information Title Search
• https://www1.hkexnews.hk/listedco/listconews/sehk/2026/0904/2026090401511.pdf
• https://www1.hkexnews.hk/listedco/listconews/sehk/2026/0819/2026081900929.pdf
• https://www1.hkexnews.hk/listedco/listconews/sehk/2026/0717/2026071701457.pdf
• Home Page
• Kingsoft Cloud (3896) Historical Stock Data: Historical Prices, Quotes and Charts - Investing.com
• content.etnet.com.hk
• Kingsoft Cloud (3896) Technical Analysis, Forecasts and Trading Suggestions - Investing.com
• 3896 Kingsoft Cloud Technical Analysis｜Moving Averages and Technical Indicators
• Kingsoft Cloud (03896) Latest Shareholders
• Kingsoft Cloud (03896.HK) - Detailed Quote
• Kingsoft Cloud (03896) Stock Connect Holdings | Mutual Market | Capital Flows

This report was automatically retrieved, compiled and generated by AI based on publicly available information. Information is current as of the close of trading on September 11, 2026; the valuation currency is Hong Kong dollars (HKD). Certain trading-volume and technical-indicator figures are based on public data or estimates recalculated from closing prices; specific uncertainties are described in the relevant sections. Information may differ in terms of timeliness. Specific data should be based on the company’s official announcements and authoritative data terminals. This report is for information and research reference only and does not constitute investment advice. Investors should make independent judgments and bear investment risks themselves.