Kingsoft Cloud: Enterprise Cloud Drag, Margin Pressure, And Geopolitical Risk Keep Stock On Hold

2025-05-30 12:54:26 ET

Summary

• We rate Kingsoft Cloud as HOLD due to limited upside, margin pressure, and macro headwinds impacting enterprise cloud growth.
• KC's revenue and EBITDA missed consensus, with enterprise cloud weakness and increased AI investment weighing on margins and near-term outlook.
• Competition from DeepSeek and uncertainty around AI chip supply add to risks, while Xiaomi AI's ramp-up is still early and slow to monetize.
• Leasing AI infrastructure preserves cash but pressures margins; We recommend investors stay on the sidelines and prefer proven players like Alibaba.

Kingsoft Cloud ( KC ) reported Q1 2025 with revenue and adjusted EBITDA that came in below consensus due to a miss on the enterprise cloud that was negatively impacted by a combination of factors, including Chinese New Year and global supply chain uncertainties. The increase in AI investment also negatively impacted margins....

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