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Why Kingsoft Cloud Holdings Ltd (KC) Skyrocketed in Q4
We recently published a list of 15 AI Stocks That Skyrocketed in Q4. In this article, we are going to take a look at where Kingsoft Cloud Holdings Limited (NASDAQ:KC) stands against other stocks that skyrocketed in Q4.
AI has been dominating the news, market, and basically almost everything we come across for the last two years, since the launch of ChatGPT. In 2024, AI made significant strides, especially in agentic systems and smaller, more efficient models. In addition to that, advancements in retrieval-augmented generation (a method that combines information retrieval with text generation) improved data accuracy and reduced AI errors, while smaller models became faster and more energy-efficient, making AI more accessible.
However, the year also saw a rise in AI-driven cybercrime, with deepfakes used in scams and election interference. As these risks grew, governments and regulators began to implement measures to control AI’s development and use. However, opinions on the balance between innovation and safety remain divided.
The Next Chapter for AI in 2025
While AI continues to evolve and shows immense long-term potential, it still faces challenges such as data limitations, model reliability, and the need for revenue-generating applications. With the maturity of this technology, it will be crucial to address these obstacles in order to meet investor expectations and unlock its full potential in the coming years.
Julie Biel, chief market strategist and portfolio manager at Kayne Anderson Rudnick, discussed the current state of AI investments in a CNBC interview and noted that while significant capital has been poured into developing the technology, much of it is still at the infrastructure stage. She pointed out that AI’s efficiency improvements are beneficial, but the lack of revenue-generating use cases is preventing broader enthusiasm. Biel also raised concerns about a potential AI bubble, as she mentioned issues such as hallucinations and data limitations that could become a hurdle in short-term progress. Despite the strong long-term outlook, she suggested that investors’ patience may wear thin if immediate returns do not materialize.
In another CNBC interview, Anastasia Amoroso, iCapital chief investment officer, highlighted the continued growth of AI as a major theme in 2024, especially its expansion into AI software and power. She noted that while the last two years focused on semiconductors, this year should focus on AI software monetization and the energy demands of AI infrastructure, like data centers. Amoroso believes that AI will remain a key investment opportunity into 2025 and that the sector’s broadening scope, including AI software and its supporting power needs, presents solid prospects for growth.
Our Methodology
For this article, we listed 15 best-performing stocks from Insider Monkey’s database of AI stocks with at least over 100% share price returns in the fourth quarter of 2024. The stocks are listed in ascending order of their share price performance. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s Q3 database of 900 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Surging Growth Driven by AI and Strategic Partnerships at Kingsoft Cloud Holdings Limited (KC)
An executive standing in front of their headquarters building, proudly symbolizing the company's achievements.
Kingsoft Cloud Holdings Limited (NASDAQ:KC) is a China-based company that offers a range of cloud services, including IaaS, PaaS, and SaaS solutions. Its product portfolio covers cloud computing, network services, database management, big data, security, storage, and delivery. The company provides digital solutions and R&D services across various industries, such as video, e-commerce, intelligent mobility, AI, and mobile internet. It also supports enterprise cloud services in sectors like finance, public service, and healthcare.
Kingsoft Cloud (NASDAQ:KC) experienced a surge likely due to multiple reasons in the last quarter. One of the main reasons could be a 16% YoY increase in FQ3 2024 revenue, reaching nearly RMB 1.886 billion (RMB 1 = US$0.14), with significant growth driven by AI and ecosystem services. Public cloud revenue grew 15.6% to $167.5 million, while enterprise cloud revenue rose 16.7% to $101.2 million. AI contributed 31% to public cloud revenue, as noted by CEO Tao Zou.
As mentioned in its earnings call, the company also continues to drive growth with a strong focus on AI and its collaboration with Xiaomi. The company’s revenue growth had significant contributions from Xiaomi’s AI ecosystem, including advancements in autonomous driving and AI. It also renewed its agreements with Kingsoft Corporation (parent company) and Xiaomi for continued cloud services and financial offerings, spanning over three years and starting in 2025.
Kingsoft Cloud (NASDAQ:KC) was also upgraded by notable analysts. On November 22, Nomura upgraded Kingsoft Cloud to Buy with a target price of $6.70, as the firm mentioned that the growth was driven by AI revenue and strong cloud demand from Xiaomi, particularly for electric vehicles, autonomous driving, and language model training, which should boost sales and margins. Moreover, on December 6, The Fly reported that UBS upgraded Kingsoft Cloud to Buy with a price target of $12.50, up from $4.20, following strong Q3 results.
Overall, KC ranks 4th on our list of stocks that skyrocketed in Q4. While we acknowledge the potential of KC as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
