Shares of Kingsoft Cloud Holdings (KC +9.96%) rallied on Wednesday, following bullish analyst commentary.

Image source: Getty Images.

Intriguing expansion prospects

Morgan Stanley analyst Yang Liu views Kingsoft as an excellent way for investors to profit from the long-term growth of China's nascent artificial intelligence (AI) industry.

Liu believes the cloud services provider will be a prime beneficiary of the surging demand for AI infrastructure.

In turn, he estimates that Kingsoft will increase its revenue by 35% annually through 2028. Liu predicts the company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) could rise by an even more impressive 79% per year during that time.

Expand

NASDAQ: KC

Kingsoft Cloud

Today's Change

(9.96%) $1.01

Current Price

$11.15

Key Data Points

Market Cap

$3.3BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day's Range

$10.79 - $11.20

52wk Range

$8.35 - $18.52

Volume

2.4M

Avg Vol

1.5M

Gross Margin

14.86%

All told, Liu thinks Kingsoft's shares could be worth as much as $15, signifying potential gains of more than 42% for investors who buy its stock today.

Buyer beware

There's little doubt that China's AI market will grow rapidly in the coming years. The AI race has global ramifications, and China won't allow itself to fall too far behind the U.S. or other rivals.

The bigger question is how much of those gains will accrue to shareholders. The Chinese government keeps a heavy grip on its tech industry, and its regulations and enforcement actions often have negative consequences for investors.