KC
AI demand is doing the heavy lifting
Kingsoft Cloud just turned in a quarter that says one thing loud and clear: the AI cloud party is still going strong. Revenue jumped 37.2% year over year to 2.70 billion yuan, beating estimates, with public cloud sales getting a big lift from AI adoption and a deeper push into enterprise customers.
That’s the kind of growth investors like to see when everyone’s fighting over the AI infrastructure pie. The company said AI cloud gross billings surged 90.1% from a year ago and, for the first time, made up more than half of public cloud revenue. In other words, AI is no longer the side dish — it’s the main course.
The catch: growth is expensive
Here’s the part that makes your spreadsheet grimace. Adjusted gross margin fell to 13.0% from 16.6% a year earlier, dragged down by higher server costs, AI expansion spending, and upfront costs tied to certain customers and future revenue activity. The adjusted operating loss also widened, which is a reminder that scaling AI infrastructure is a little like renovating a house while living in it: loud, messy, and not cheap.
Management didn’t exactly sound cautious, though. It said token-service revenue in April was up 53-fold from January levels, and it expects 2026 AI infrastructure spending to land between 15 billion and 20 billion yuan. Translation: they’re leaning into the buildout, not tapping the brakes.
Xiaomi helps, but the AI bill comes due
Revenue tied to the Xiaomi and Kingsoft ecosystems climbed 68.9% year over year, giving the company another growth engine besides pure AI demand. That matters because it adds some diversification to the story, even if Xiaomi itself is mostly a supportive character here, not the star.
Big picture: Kingsoft Cloud is showing that AI can absolutely juice demand for cloud services — but the market will keep asking the same annoying question: how much growth is enough if the margins keep getting squeezed?