Shares of Kingsoft Cloud Holdings Ltd (KC) plummeted 5.07% in Wednesday's trading session following the release of its second quarter 2025 financial results. The cloud service provider reported wider losses despite revenue growth, disappointing investors.

Kingsoft Cloud announced a net loss of 0.11 Chinese renminbi ($0.01) per diluted share for Q2, compared to a loss of 0.10 renminbi in the same quarter last year. This fell short of analysts' expectations, as a FactSet poll had predicted a loss of 1.23 renminbi. The company's revenue, however, saw a significant increase, rising to 2.35 billion renminbi from 1.89 billion renminbi a year earlier, surpassing the FactSet consensus estimate of 2.21 billion renminbi.

The widening losses can be attributed to several factors. Kingsoft Cloud reported higher costs associated with its expansion into AI-related businesses, including increased expenses for computing resources and depreciation of newly acquired servers. Additionally, the company faced higher credit loss expenses resulting from prepayments made to suppliers for server procurement. Despite the strong revenue growth, particularly in the public cloud and AI segments, these increased costs and expenses have put pressure on the company's bottom line, leading to investor concerns and the subsequent stock price drop.