Goldman Sachs upgraded KINGSOFT CLOUD's rating to "Buy," expecting it to benefit from Xiaomi's continued investment in AI development

Goldman Sachs published a research report, upgrading the investment rating of Kingsoft Cloud (KC.US) from "Neutral" to "Buy." The firm expects Xiaomi (01810.HK) to invest approximately RMB 10 billion in the AI field by 2026, and Kingsoft Cloud is expected to be a major beneficiary of Xiaomi's continued investment in AI development, raising the target price for Kingsoft Cloud's U.S. stock from $14.2 to $15.6.

The firm pointed out that Xiaomi is keen to integrate AI with the physical world through its "People, Vehicles, and Home" ecosystem. It is expected that Kingsoft Cloud will update its related transaction agreement with Xiaomi by mid-year, allowing the revenue ceiling from Xiaomi for 2026 to 2027 to increase by 10% to 15% compared to the current ceiling, implying a compound annual growth rate of 37% for revenue from Xiaomi from 2025 to 2028.

Goldman Sachs raised its revenue forecast for Kingsoft Cloud for 2026 to 2028 by 4% to 13%, and adjusted EBITDA forecasts were raised by up to 4%, but the EBITDA forecast for 2025 was lowered by 6% to reflect increased operating expenses