Goldman Sachs raises the target price of KINGSOFT CLOUD to $17.70 and maintains a "Buy" rating

Goldman Sachs published a research report indicating that Kingsoft Cloud (03896.HK) exceeded expectations in both revenue and profit in the fourth quarter of last year. Revenue grew by 24% year-on-year, primarily benefiting from a 35% year-on-year increase in public cloud revenue. Revenue related to artificial intelligence grew by 95% year-on-year to RMB 926 million, accounting for 34% of total revenue and 49% of public cloud revenue. Revenue from Xiaomi and the Kingsoft ecosystem increased by 63% year-on-year, making up 29% of total revenue. Adjusted EBITDA grew by 118% year-on-year to RMB 785 million, exceeding the bank's and market expectations by 24% to 25%, with the adjusted EBITDA margin improving by 12 percentage points year-on-year to 28.4%. Non-GAAP operating profit recorded a positive number for two consecutive quarters, reaching RMB 55 million, mainly due to operating expenses being lower than expected.

Goldman Sachs pointed out that its affiliate Xiaomi-W (01810.HK) plans to invest RMB 200 billion in research and development over the next five years, including RMB 60 billion in artificial intelligence over the next three years. As a partner in Xiaomi's artificial intelligence infrastructure, Kingsoft Cloud will benefit from the external service demand for Xiaomi's AI applications. The bank raised its revenue forecast for Kingsoft Cloud for 2026 to 2028 by 2% to 5%, and adjusted EBITDA forecasts were raised by 9% to 17%. The target price for Kingsoft Cloud (KC.US) on the US stock market was raised from $15.6 to $17.7, maintaining a "Buy" rating