Analysis of the Dual Impacts of Kingsoft Corporation (03888.HK)'s AI Transformation and Weak Gaming Business

Kingsoft Corporation (03888.HK), a representative of China’s software industry, benefited from the AI concept boom in the Hong Kong stock market in 2025 [0]. The launch of WPS AI 3.0 and Lingxi Intelligent Agent drove growth in the office software business, with revenue in this segment rising 26% year-on-year [0], partially offsetting the impact of the weak gaming business. However, the Q3 financial report showed that the company’s revenue was 2.419 billion yuan, down 17% year-on-year, and net profit was 213 million yuan, down 48.5% year-on-year [6]. The gaming business’s underperformance was the main drag [5]. Analyst ratings are divided: Bank of Communications International raised the target price to 50 yuan [7], Bank of China International maintained a Buy rating [8], but CICC and CLSA lowered their target prices to 39 yuan and 37.8 yuan respectively [1][9].

1. Dual Situation
   : Short-term weak gaming business led to performance decline (net profit down 48.5% [6]), while long-term AI investment (R&D expenses in the first three quarters increased 18.48% year-on-year [0]) brings growth potential;
2. Market Divergence
   : Mixed analyst ratings reflect different expectations for the pace of transformation [1][7][9];
3. Business Structure Resilience
   : Growth in the office software business partially offset the impact of the gaming business, showing the value of diversified layout [0].

: Uncertainty in gaming business recovery [10], short-term profit pressure (net profit down 48.5% [6]), market expectation fluctuations;
: Penetration potential of AI office software [4], growth of WPS subscription business [0], long-term dividends from AI transformation.

Kingsoft Corporation (03888.HK) currently faces short-term performance challenges and long-term transformation opportunities. Progress in the AI office field provides growth momentum for the company, but the weakness of the gaming business still needs attention. Mixed analyst ratings remind investors to balance short-term risks and long-term potential.