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 Chinese New Year holiday and differences in project delivery schedules.

Margins Pressure Profitability

Adjusted gross profit increased to 351.4 million Chinese yuan ($50.9 million) from 327.7 million Chinese yuan in the year-ago quarter.

Adjusted gross margin fell to 13.0% from 16.6% a year earlier and 17.1% in the previous quarter, mainly due to higher server costs, expansion of its AI business, and upfront costs tied to certain customers and future revenue activity.

The adjusted operating loss widened to 59.8 million Chinese yuan ($8.7 million) from a loss of 55.8 million Chinese yuan a year earlier.

The company reported an adjusted loss of 11 cents per ADS, compared with the analyst consensus estimate for a loss of 12 cents per ADS.

Kingsoft Cloud ended the quarter with 4.90 billion Chinese yuan ($710.9 million) in cash and cash equivalents as of March 31, 2026.

Kingsoft Cloud Management Highlights AI Growth Trends

CEO Tao Zou said rapid adoption of AI coding tools and AI agents is driving demand for both model training and inference services, creating broader opportunities across the cloud-computing industry.

Zou said AI cloud gross billings surged 90.1% year over year to 1 billion Chinese yuan in the quarter, accounting for more than half of public cloud revenue for the first time. He added that token-service revenue in April increased 53-fold from January levels.

Xiaomi Ecosystem Expansion Supports Growth

The company also expanded cooperation with the Xiaomi and Kingsoft ecosystems, with related revenue climbing 68.9% year over year, supported by Xiaomi's investments in AI and its "human-car-home" smart ecosystem.

AI Infrastructure Spending Set To Accelerate

Chief Financial Officer Yi Li said the company plans to continue investing heavily in AI infrastructure as demand remains strong from large-language-model developers, autonomous driving companies, robotics firms and internet platforms.

Li said AI-related capital expenditures and leased assets totaled nearly 3 billion Chinese yuan in the first quarter. The company expects total 2026 AI infrastructure spending to reach between 15 billion Chinese yuan and 20 billion Chinese yuan.

She also said management expects cloud-computing pricing trends to remain favorable as supply-chain constraints and strong AI demand continue supporting higher industry pricing.

Kingsoft Cloud Stock Performance

KC Price Action: Kingsoft Cloud shares were up 1.61% at $13.24 at the time of publication on Wednesday, according to Benzinga Pro data.

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