Kingsoft Corporation (03888.HK) Hot Stock Analysis: AI-Powered Office Business Delivers Strong Growth, Gaming Business Faces Short-Term Pressure

This analysis is based on market reports from multiple financial media outlets including Investing.com [0][1][3]. As a leading domestic office software enterprise, Kingsoft Corporation has recently received both an initial institutional coverage rating and a technical breakthrough signal, forming a dual positive catalyst. The company currently operates a dual-driver business structure of “Office Software and Services + Online Games and Other Businesses”, but there is a clear divergence in the performance of the two segments [4].

From a timeline perspective, Galaxy Securities released an in-depth research report to initiate coverage of Kingsoft Corporation on December 31, 2025, assigning a “Recommend” rating [1]. Coincidentally, the “Golden Cross” technical pattern formed on January 7, 2026 [3], and the timing resonance between the two provides a certain support basis for the stock price. However, investors should note that the company is currently in the quiet period before earnings release, with approximately two and a half months remaining until the next financial report is announced (March 24, 2026) [0], during which there will be no earnings verification.

Kingsoft Corporation’s Q3 2025 financial data shows distinct structural characteristics. The office software and services business recorded revenue of RMB 1.521 billion, representing a substantial 26% YoY growth [4], which is mainly driven by the enterprise (B-end) business empowered by WPS AI. As a SaaS product targeting enterprise customers, WPS 365 saw its Q3 revenue surge 71.61% YoY [1][2], indicating that AI functions have significantly boosted enterprise customers’ willingness to pay. WPS Office’s global Monthly Active Users (MAU) reached 669 million, up 9% YoY, and cumulative paying users hit 41.79 million, a 10% YoY increase [4], reflecting a solid user base and continuously improving monetization capabilities.

In stark contrast to the strong performance of the office business, the gaming business only recorded RMB 898 million in Q3 revenue, a sharp 47% YoY decline [2][4]. This decline is mainly affected by two factors: first, the performance of new category products is divergent, with revenue from products such as Mecha BREAK falling; second, the core IP JX Online series has entered the mature stage, leading to slow user growth. The company is actively promoting the transformation of its gaming business, including expanding into new categories such as sci-fi and anime-style games, and accelerating its game overseas expansion strategy, but the short-term performance pressure pattern is difficult to reverse quickly.

From a valuation perspective, Kingsoft Corporation currently has a Price-to-Earnings (P/E) ratio of approximately 25x [0], which is within a reasonable range for the software services industry. Considering the company’s RMB 26 billion cash reserve [2], its financial structure is robust, and its high gross profit margin (maintained above 80% for a long time) [4] provides sufficient ammunition for future development. However, the continuous decline of the gaming business and AI investment may erode short-term profits, and investors need to closely monitor changes in profit quality.

Kingsoft Corporation formed a “Golden Cross” technical chart pattern today: the 10-day moving average crossed above the 20-day moving average [3]. This is a classic medium-term bullish signal, usually indicating that the short-term momentum of the stock price is strengthening. Historical data shows that after the formation of the “Golden Cross” pattern, the stock price often maintains an upward trend for a period of time, but the sustainability and magnitude still need to be verified by fundamentals.

From a price position analysis, the current share price is approximately HK$29.70, close to the 52-week low of HK$27.24, representing a decline of about 37.5% from the 52-week high of HK$47.50 [0]. This position not only means that the callback risk is relatively limited but also reflects the market’s concerns about the company’s declining gaming business. The RSI (14) is in the neutral zone of 48.84 [0], neither overbought nor oversold, and technically in a state of waiting for a breakthrough. The Beta coefficient of 0.62 indicates that the company has low-volatility defensive characteristics [0], and may be favored by safe-haven funds during market fluctuations.

Recent trading volume has remained at 11.01 million shares, lower than the 3-month average of 14.31 million shares [0], indicating a decline in market participation. If the stock price can effectively break through the integer threshold of HK$30 with an increase in trading volume, a technical rebound can be expected; conversely, if it breaks below the US$28.50-29.00 support range, it may retest the 52-week low support.

Kingsoft Corporation’s AI strategic layout is transitioning from the proof-of-concept stage to large-scale implementation, which may be the core variable affecting the company’s long-term valuation. WPS AI 3.0 (also known as “WPS Lingxi”) has formed a five-application matrix including AI Voice Assistant, AI PPT, AI Knowledge Base, AI Document Revision, and AI Data Assistant [4], covering core enterprise office scenarios such as document creation, knowledge management, and data processing. More notably, its government AI products have been implemented in central and local Party and government agencies [1][4], meaning the company’s first-mover advantage in the Information Technology Application Innovation (Xinchuang) field is gradually being converted into actual revenue.

From an industry trend perspective, empowering office software with large AI models has become an industry consensus, and the launch of Microsoft Copilot has accelerated this process. As a leading domestic office software provider, Kingsoft Corporation has localized advantages and massive user data accumulation, and is expected to occupy a favorable position in the AI-powered office era. If WPS AI can continuously improve user activity and paying conversion rates, the company’s valuation logic may shift from that of a traditional software company to an AI company, which will be the most important mid-to-long-term investment theme.

The continuous decline of the gaming business is an important factor suppressing Kingsoft Corporation’s valuation, but from another perspective, it is also a catalyst forcing the company to accelerate transformation. The company has clearly stated that it will break away from its reliance on traditional martial arts genres and actively promote game overseas expansion [4]. New games planned for launch in 2026 include well-known IP products such as Goose Goose Duck and Angry Birds [2], and their market performance will directly affect whether the gaming business can bottom out and rebound.

On the positive side, after the launch of the cross-platform version of JX3 Unlimited, there has been a significant user return [4], indicating that the core IP still has vitality. Meanwhile, the framework agreement signed with Xiaomi covers cooperation in areas such as promotion services and game joint operation [5], which is expected to leverage Xiaomi’s channel advantages to expand the game user base. The transformation pain period of the gaming business may last 6-12 months, but once a breakthrough is achieved in new categories or the overseas expansion strategy, it will bring a new growth engine for the company.

As a leading domestic sell-side institution, Galaxy Securities’ initial coverage rating often serves as a market indicator [1]. Assigning a “Recommend” rating instead of “Overweight” or “Buy” reflects the institution’s cautiously optimistic attitude towards the company’s mid-to-long-term prospects. From the perspective of earnings forecasts, Galaxy Securities expects the company’s 2025-2027 operating revenue to be RMB 10.568 billion, RMB 11.608 billion, and RMB 13.4 billion respectively, with earnings per share (EPS) of RMB 1, RMB 1.11, and RMB 1.31 respectively [1][2]. The implied compound annual growth rate (CAGR) of this forecast is approximately 15%, which is relatively conservative but highly achievable.

Initial institutional coverage usually means that the company has entered the attention of mainstream institutional investors, which may bring incremental capital inflow. For a stock like Kingsoft Corporation that has long been overlooked by the market, the change from no institutional coverage to having coverage is a potential positive in itself. Going forward, it is necessary to pay attention to whether more institutions follow up with research reports, as well as changes in the holdings of Northbound and Southbound capital.

: The 47% YoY decline in Q3 gaming revenue exceeded market expectations [2]. If the expansion into new categories or the overseas expansion strategy does not proceed smoothly, the gaming business may fall into a longer downturn. This risk directly affects the company’s overall performance flexibility and is currently the biggest fundamental hidden danger.

: Although the current 25x P/E ratio seems reasonable, it should be noted that there is a clear divergence in valuations in the software industry, and AI concept companies often enjoy higher valuation premiums. If Kingsoft Corporation cannot effectively prove the commercialization capability of its AI strategy, its valuation may face downward pressure.

: There are approximately 11 weeks remaining until the next earnings release [0], during which the market may repeatedly game the company’s performance expectations. If Q4 or full-year results fall short of market expectations, the stock price may come under pressure again.

: Competition in the office software industry at home and abroad continues to heat up. International giants such as Microsoft and Google continue to invest in the AI-powered office field, and domestic emerging players are also trying to capture market share. Kingsoft Corporation needs to maintain product competitiveness to defend its market share.

: After the formation of the Golden Cross pattern, if the stock price can effectively break through the HK$30 resistance level with an increase in trading volume, a phased rebound may start. Considering that the current stock price is close to the 52-week low, the downside risk is relatively limited, making the risk-reward ratio somewhat attractive.

: The earnings release on March 24, 2026, will be an important catalyst [0]. If the office business continues to maintain high growth, and the gaming business stabilizes or its decline narrows, better-than-expected results may drive a revaluation of the stock price.

: The global AI investment boom continues, and WPS AI, as a leading domestic office AI product, is expected to gain increased market attention. If the AI strategy implementation progresses smoothly, it may attract allocations from AI-themed funds.

: The company holds a cash reserve of RMB 26 billion [2], with cash accounting for more than 60% of its total market capitalization. This financial advantage often attracts the attention of value investors in the Hong Kong stock market. If market concerns about the company’s gaming business ease, there will be considerable room for valuation repair.

: Focus on the confirmation of the Golden Cross pattern by the stock price. If it breaks through HK$30 with increased volume, the probability of a rebound will rise; if it breaks below HK$29, the support level needs to be re-evaluated.

: Focus on the earnings release on March 24, which is a key node to verify the company’s growth logic. The performance of Q4 and the full year will directly affect the market’s adjustment of its 2026 performance expectations.

: The progress of AI strategy implementation and the effectiveness of gaming business transformation will be the key variables determining the company’s long-term value. Changes in WPS AI’s user conversion rate and paid penetration rate are particularly worthy of attention.

As a leading domestic office software provider, Kingsoft Corporation is in a strategic opportunity period empowered by AI. The WPS business has seen strong growth, with a 26% YoY increase in Q3, and revenue from the enterprise-focused WPS 365 surging 71.61% YoY. Its global MAU reached 669 million, AI function iterations are accelerating, and government AI products have been implemented in Party and government agencies. The gaming business is facing short-term pain, with a 47% YoY decline in Q3, and is advancing new categories and overseas expansion strategies.

From a valuation perspective, the company currently has a P/E ratio of approximately 25x, holds a RMB 26 billion cash reserve, and has a robust financial structure. Galaxy Securities initiated coverage with a “Recommend” rating, expecting steady growth in revenue and profit from 2025 to 2027. Technically, the “Golden Cross” pattern has formed, the stock price is close to the 52-week low, and downside risk is relatively limited.

Key observation nodes include: the earnings release on March 24, the breakthrough of the key technical resistance level of HK$30, the progress of AI function iterations, and the performance of new game launches. Investors should combine their own risk preferences and make decisions on the basis of a full understanding of the company’s business structure and industry competition pattern.