Nomura/Instinet Downgrades Kingsoft Cloud (KC) to Neutral

Nomura/Instinet analyst Bing Suan downgraded Kingsoft Cloud (NASDAQ: KC) from Buy to Neutral with a price target of $18.10 (from $6.70).

The analyst comments: "We expect Kingsoft Cloud's (KC) business momentum to remain solid, led by the strong AI revenue outlook driven by LLM training demand from Xiaomi (1810 HK, Buy, covered by Donnie Teng), as well as inference demand from Xiaomi and Kingsoft (3888 HK, Buy) for autonomous driving and WPS AI. Moreover, as DeepSeek (unlisted) is accelerating its AI investment in China, we believe KC is well positioned to benefit from its strong reserve and pipeline of AI servers. We raise FY24-26F revenue/earnings forecasts by 0.7-4.4%/ 0.4-19.3% to reflect the better-than-expected AI demand. However, the stock has rallied 57% YTD and 135% in 60 days (vs 4.5% YTD and -2.4% in 60 days for the Nasdaq Index), which we think has fairly reflected the positive outlook. We, hence, downgrade the stock to Neutral with a revised DCF-based TP of USD18.1 (methodology unchanged), implying 2.9x FY26F P/S."

For an analyst ratings summary and ratings history on Kingsoft Cloud click here. For more ratings news on Kingsoft Cloud click here.

Shares of Kingsoft Cloud closed at $16.33 yesterday.

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