Kingsoft Cloud Holdings Ltd. ADR

Kingsoft Cloud Holdings reported record total revenue of RMB3.07 billion for the second quarter of fiscal 2026, up 31% year-over-year, driven by an 82% surge in AI cloud gross billings to RMB1.33 billion, which now account for 56% of public cloud revenue. Adjusted gross margin improved to 15.4%, up 2.4 percentage points quarter-over-quarter, and adjusted operating profit turned positive for the first time with a record 4.0% margin. Adjusted net loss narrowed to RMB6 million from RMB300 million a year earlier, while capital expenditures including right-of-use assets rose to RMB3.3 billion from RMB2.9 billion last quarter. Xiaomi-Kingsoft ecosystem revenue grew 28% year-over-year to RMB810 million, representing 26% of total revenue, and management confirmed full-year capex guidance remains unchanged at RMB6.2 billion.

Zacks Investment Research identifies GDS Holdings, NetEase, Kingsoft Cloud, and Taiwan Semiconductor as compelling portfolio opportunities entering the second half of 2026, citing steady U.S.-China trade progress and company-specific catalysts. GDS secured a record 200 megawatts of net new bookings in the first quarter, with full-year revenue guidance of RMB 12,400 to 12,900 million. NetEase launched a dual primary listing in Hong Kong and expanded its game lineup with Where Winds Meet on Xbox and Once Human coming to consoles. Kingsoft Cloud saw AI gross billing surge 90% year over year, crossing 50% of public cloud revenues, and raised Xiaomi cloud service caps to RMB 4 billion for 2026. Taiwan Semiconductor posted May revenue of approximately NT$416.98 billion, up 30.1% year over year, and guided second-quarter revenue of $39 to $40.2 billion with gross margins of 65.5% to 67.5%.

Kingsoft Cloud Holdings shares jumped after Morgan Stanley analyst Yang Liu issued bullish commentary, calling the stock undervalued and a prime beneficiary of surging AI infrastructure demand in China. Liu projects Kingsoft’s revenue will grow 35% annually through 2028, with adjusted EBITDA rising 79% per year, and set a price target of $15, implying more than 42% upside from current levels. The analyst sees Kingsoft as an excellent way to profit from the long-term expansion of China’s nascent artificial intelligence industry.

Kingsoft Cloud Holdings reported first-quarter revenue of RMB 2.703 billion, a 37.2% year-over-year increase driven by a 90% surge in its AI business, which now accounts for more than half of public cloud revenue. The company narrowed its operating loss and posted a 27.6% adjusted EBITDA margin, though it still recorded a net loss of RMB 343.7 million. It invested RMB 3 billion in infrastructure during the quarter to support expanding AI demand, and management expects to maintain this investment pace. Kingsoft Cloud held RMB 4.9 billion in cash reserves at quarter-end.

The Invesco Golden Dragon China ETF has an implied analyst target price of $33.07 per unit, representing 39.71% upside from its recent price of $23.67. The target is derived from the weighted average of analyst 12-month price targets for the ETF's underlying holdings. Three holdings with notable upside are Adagene Inc, Kingsoft Cloud Holdings Ltd, and Alibaba Group Holding Ltd, which together account for 7.60% of the fund. Adagene has a target of $9.40, 166.29% above its recent price of $3.53; Kingsoft Cloud has a target of $19.92, 91.32% above its recent price of $10.41; and Alibaba has a target of $187.55, 74.56% above its recent price of $107.44.