Transition to AI Cloud Bearing Fruit; MaaS Brings Further Upside

研报英文原文证据摘录

Transition to AI Cloud Bearing Fruit; MaaS Brings Further Upside

FoundationM

Executive Summary

Kingsoft Cloud's early and firm transition to neocloud is helping it capture upside in

the AI era. Previously a mid-tier commodity cloud provider, KC started the transition in

2022 by massively scaling down the low-margin CDN business, merging it into Xiaomi's

ecosystem and going all-in on AI-related business and the technology stack despite limited

R&D and financial resources in 2024. KC successfully tapped into fast-rising training

demand from hyperscalers and AI labs. These initiatives have borne fruit, with three years

of revenue growth acceleration, the EBITDA margin trending up and operating profit

turning around in 2025. AI cloud contributed 49% of public cloud revenue in 4Q25 and is

set to further increase to 61% in 2026 and 78% in 2028 based on our estimates. We

believe sizable upside from AI inference will follow soon for KC, especially from the MaaS

business built on open-source LLMs, given KC's strong model optimization capabilities.

Xiaomi + Kingsoft ecosystem. As shareholder and ecosystem partners, Xiaomi and

Kingsoft Group jointly provide various smart and general compute use cases, covering

smartphones, AIoT home appliances, electric vehicles, office software, and games. Also,

Xiaomi entered the AI model market with the debut of MiMo and has committed to high

AI investment on a sustained basis in 2026. This directly led to 27-47% upward revisions

to the connected transaction volume cap between Xiaomi and KC in 2026-27, paving the

way for KC's faster revenue growth, though KC management indicated there would be

even faster growth from external customers.

Margin upside and improved cash flow arrangement. Chinese public cloud players