Jefferies analyst Thomas Chong lowered Kingsoft Cloud Holdings Ltd (NASDAQ:KC) price target to $18 on May 28 and maintained a buy rating. The adjustment took place just a few hours after the company released its results in the first quarter of 2025.

A computer engineer sitting in front of several connected consoles illustrates the depth of cloud services provided by the company.

Kingsoft Cloud's quarterly revenue reached RMB 1.97 billion ($271.5 million), up 10.9% year-on-year, but fell 11.7% in the quarter. Management attributes the sequential decline to seasonal factors and timing issues related to product delivery in the enterprise cloud space.

But despite the challenges, the company's CEO Tao Zou believes the future of their cloud business is strong. “The importance of cloud services as infrastructure in the AI-ER era is gaining greater appeal,” he said. Therefore, the company is “fully committed to our relevant investments and high-quality and sustainable business development.”

Chong also talked about this aspect in his research report. He highlighted the strong demand for Kingsoft Cloud's AI services despite the basis of reaching the target price. It is worth noting that the company's total charges for AI business increased by 228% year-on-year to 525 million yuan (US$72.975 billion). He also noted that Kingsoft Cloud's new leasing approach could reduce gross margins, but could also reduce reliance on cash reserves. With the current price target of $16, Jefferies' valuation reflects Kingsoft Cloud's financial position and evolving market conditions.

Kingsoft Cloud Holdings Limited (NASDAQ:KC) is a leading cloud service provider in China. The company offers products such as infrastructure-AS-AS-Service (IAAS), platform-As-As-Service (PAAS), and Enterprise Cloud Services. These products combine advanced technologies such as AI, big data, the Internet of Things and edge computing.

Although we acknowledge the potential of Kingsoft Cloud Holdings Ltd (NASDAQ:KC) as an investment, our belief is that certain AI stocks have greater hope to offer higher returns and limited downside risks. If you are looking for AI stocks that are more promising than KC and have 100x overhead potential, check out our report on the cheapest AI stocks.

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Disclosure: None.