Kingsoft Cloud (NasdaqGS:KC): Evaluating Valuation After Robust Q2 Revenue Surge and AI-Driven Growth Outlook

If you are a shareholder in Kingsoft Cloud Holdings (NasdaqGS:KC) or simply watching from the sidelines, the latest Q2 2025 update may give you pause and perhaps a reason to dig deeper. The company just announced a 24% jump in revenue, propelled largely by a surge in its AI business and expanding partnerships. Management appears optimistic too, forecasting even greater growth for the second half of the year, thanks in part to deeper integration of AI across healthcare, finance, and public services.

This upbeat guidance has nudged the stock upward over the past three months, extending a pattern of solid year-to-date momentum, even as the shares remain well below highs from a few years ago. While net losses widened, improvements in the company’s underlying business, such as a stronger adjusted EBITDA, suggest better operational efficiency. Investors have started to respond as confidence grows that Kingsoft Cloud can convert its market presence in AI into sustainable long-term growth, but questions remain regarding the ongoing path to profitability.

With all this in play, is Kingsoft Cloud finally positioned for a sustainable rally, or has the market already priced in its next wave of AI-fueled growth?

Most Popular Narrative: 15.2% Undervalued

According to community narrative, analysts view Kingsoft Cloud Holdings as undervalued by around 15% based on their future earnings growth and profitability projections.

The strategic partnership with the Xiaomi Kingsoft ecosystem is expected to drive substantial future revenue growth. Approved commitments of RMB 11.3 billion over the next three years may enhance both revenue and profitability. Kingsoft Cloud's rapid growth in AI-related revenues, which increased by nearly 500% year-over-year, is a strong indicator of future revenue expansion as AI integration continues to deepen across industries.

Want to know the rocket fuel behind this bold price target? The narrative points to a dramatic growth rate and margin improvement, which could elevate Kingsoft Cloud into a new league. Interested in what financial benchmarks are included in this forecast? Explore the narrative to discover the key calculations making this stock an attractive proposition for analysts.

Result: Fair Value of $17.47 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, strong reliance on AI partnerships and the need for heavy capital investment could present challenges to Kingsoft Cloud’s long-term revenue stability if industry conditions shift.

Find out about the key risks to this Kingsoft Cloud Holdings narrative.

Another View: SWS DCF Model Suggests a Different Story

Looking at Kingsoft Cloud through our DCF model gives a very different picture from the earlier valuation based on revenue multiples. Instead of highlighting the stock as undervalued, this view suggests the shares could be expensive today. Could the market be a step ahead, or is something being overlooked?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Kingsoft Cloud Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Kingsoft Cloud Holdings Narrative

If you have your own perspective or want to test the figures for yourself, it only takes a few minutes to build your own forecast and narrative. So why not do it your way today?

A great starting point for your Kingsoft Cloud Holdings research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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