Kingsoft Cloud Holdings Ltd (NASDAQ: KC) extended its upward momentum in pre-market trading on Thursday, soaring 5.08% following a strong performance the previous day. The continued rally comes on the heels of Citi reaffirming its Buy rating and setting a price target of $21.50 for the stock, representing a significant upside potential.

The cloud service provider's stock has been gaining traction due to its association with Xiaomi's recent unveiling of its first Large Language Model, MiMo. Investors are speculating that advancements in Xiaomi's AI capabilities could potentially benefit Kingsoft Cloud, given the leadership connection between the two companies through businessman Lei Jun.

Citi analysts highlighted MiMo's impressive performance, noting that it has outperformed competitors like OpenAI's O1 mini and Alibaba's Qwen-32 B-Preview in specific tasks such as mathematical reasoning and code generation. This positive sentiment in the AI sector, coupled with Kingsoft Cloud's strong momentum, appears to be driving investor enthusiasm and contributing to the stock's pre-market surge.