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May 27, 2026 4:00 PM

Kingsoft Cloud's AI Business Is On Fire, But Ballooning Costs Squeeze Margins

Kingsoft Cloud Holdings Limited (NASDAQ:KC) reported first-quarter fiscal 2026 results on Wednesday, with revenue rising year over year and topping analyst estimates as demand for AI-related cloud services accelerated.

AI Cloud Demand Drives Kingsoft Cloud Revenue Growth

The company reported quarterly revenue of 2.70 billion Chinese yuan ($391.96 million), up 37.2% from a year earlier and above the analyst consensus estimate of $324.78 million.

Growth was driven by higher contributions from Xiaomi Corp. (OTC:XIACY) and Kingsoft ecosystems, AI-related customers, and deeper penetration into enterprise cloud customers.

Revenue declined 2.1% from the previous quarter, primarily due to seasonal weakness in the enterprise cloud segment.

Public Cloud Revenue Benefits From AI Adoption

Public cloud services revenue increased 47.5% year over year to 1.996 billion Chinese yuan ($289.4 million), supported by rising AI demand. Revenue in the segment rose 4.9% from the prior quarter.

Enterprise cloud services revenue rose 14.7% year over year to 707.4 million Chinese yuan ($102.6 million). However, revenue declined 17.6% sequentially due to the impact of the ...

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