Goldman Sachs has moved Kingsoft Cloud (NASDAQ: KC) from Neutral to Buy and established a price target of $15.60, a level the bank says implies roughly 16% upside from the stock's then-current price of $13.12. The $15.60 target sits within the range of analyst estimates identified by InvestingPro, which span from $14.32 to $21.50.
The upgrade hinges on Goldman Sachs' view that Kingsoft Cloud stands to benefit materially from increased AI investment by Xiaomi. Goldman projects Xiaomi's AI spend will rise to about 10 billion yuan in 2026, up from just over 7 billion yuan in 2025, with Xiaomi pursuing large language model development and tighter AI integration across its "Human x Car x Home" ecosystem. Goldman expects the two companies to renew a related-party transaction agreement before mid-year, a renewal that could effectively raise Xiaomi's revenue cap with Kingsoft Cloud by 10% to 15% for 2026-2027 versus current arrangements.
That potential contract reset is central to Goldman's scenario that Xiaomi-related revenue could compound at about 37% annually from 2025 through 2028. The bank's overall top-line modeling for Kingsoft Cloud is also above consensus: Goldman projects a 22% revenue compound annual growth rate for 2025-2028 and notes its revenue forecasts for 2026-2028 average roughly 14% higher than the Visible Alpha consensus.
Investors have already seen meaningful revenue momentum at the company. InvestingPro data show Kingsoft Cloud delivered 24.11% revenue growth over the last twelve months, bringing trailing revenues to $1.27 billion. Despite that expansion, InvestingPro indicates the company was not profitable over the same period, with a diluted EPS of -$0.53 and a negative return on invested capital of -4%.
Goldman Sachs also projects that Kingsoft Cloud will scale capital expenditure aggressively in 2026, modeling approximately 9 billion yuan of capex that would represent about 30% year-over-year growth. The bank flags that rising upstream input costs - including GPUs, CPUs, and memory - are making cloud pricing more dynamic, but it expects Kingsoft Cloud to prioritize profitability over market share. Goldman highlights the company's focus on premium customers as providing some insulation from industry-wide price moves.
The market reaction to these developments is occurring against a backdrop of elevated stock volatility. InvestingPro data cited by Goldman show Kingsoft Cloud's shares have risen nearly 30% year-to-date while trading with a beta of 2.05.
Investors will have an opportunity to hear updated guidance when Kingsoft Cloud reports next on March 25. Goldman Sachs' thesis relies in part on the company reaffirming its growth trajectory and the timing and scope of any renewed Xiaomi arrangements.
Recent operating results
Separate company results referenced in public filings and investor reporting show Kingsoft Cloud's third-quarter performance exceeded analyst expectations. The firm recorded a 31.4% year-over-year revenue increase to RMB2.48 billion (about $348.1 million), narrowly topping the consensus of RMB2.47 billion. The quarter also produced breakeven earnings per share, improving from an anticipated RMB0.94 loss. Management attributed the stronger results to growth in its AI business. Notably, those third-quarter gains were followed by a decline in pre-market trading despite the upside versus consensus.
What remains uncertain
- Kingsoft Cloud has not returned to profitability on a trailing twelve-month basis and analysts do not forecast profitability for the current year, per InvestingPro.
- Upstream input cost dynamics - GPUs, CPUs, memory - are pressuring cloud pricing industry-wide and could affect margin outcomes despite the company's premium-customer positioning.
- The timing, terms, and approval of any renewed related-party agreement with Xiaomi remain critical to the revenue upside Goldman models.
For investors seeking detailed financial models and the underlying assumptions behind these projections, the investment bank's outlook and InvestingPro's research products are cited as sources of deeper analysis.