Kingsoft Cloud Holdings' stock plummeted 5.16% during intraday trading on Thursday, reflecting a sharp negative reaction to the company's latest financial results.

The decline follows the release of the company's first-quarter fiscal 2026 earnings, which revealed a net loss of approximately CNY 344 million. Despite revenue rising 37.2% year-over-year to CNY 2.70 billion and beating analyst estimates, the adjusted loss per share missed expectations, challenging optimistic narratives around the company's AI-driven growth.

Investor sentiment was further pressured by a significant squeeze on profitability. The company's adjusted gross margin fell to 13.0% from 16.6% a year earlier, attributed to higher server costs and heavy spending on AI infrastructure expansion. While management highlighted surging demand for AI cloud services, the ballooning costs and ongoing losses underscored the challenges in translating top-line growth into bottom-line profitability.