Kingsoft Corporation (03888.HK): Analysis of AI Transformation and Market Attention Amid Q3 Performance Differentiation

Kingsoft Corporation (03888.HK) is a well-known Chinese software company with core businesses covering two major segments: WPS Office software and online games [0]. The Q3 2025 results showed obvious differentiation: office software business revenue was RMB 1.521 billion, up 26% YoY, performing strongly; however, game business revenue was RMB 898 million, down 47% YoY significantly, dragging overall revenue to RMB 2.419 billion, a 17% YoY decline [1][6]. Net profit attributable to shareholders was RMB 213 million, down 48% YoY [6][7].

Affected by lower-than-expected performance, multiple international investment banks lowered their target prices: CICC reduced the target price to HK$39 [6], Morgan Stanley cut it to HK$33 and maintained a “In Line with Market” rating [5]. To stabilize market confidence, the company repurchased approximately 1.46 million shares in November, costing about HK$41 million [0]. Meanwhile, the company’s strategic focus has shifted to AI integration and international expansion; the growth expectations of WPS AI business have become a key factor attracting market attention [0].

1. Obvious Business Differentiation
   : The continuous growth of office software business and the sharp decline of game business form a stark contrast, reflecting the transformation pressure of the company’s business structure [0][1].
2. AI Drives the Future
   : Despite short-term performance pressure, AI technology integration (such as WPS AI) is regarded as the core driver of the company’s long-term growth and the main reason for current market attention [0].
3. Complex Market Sentiment
   : Under the rotation effect of the tech stock sector, AI concept stocks have become a hot spot; Kingsoft Corporation has gained market attention due to AI transformation expectations, partially offsetting the negative impact of weak Q3 performance [0].

• Sustained Downturn in Game Business
  : Game revenue still accounts for a relatively high proportion; if it fails to improve in the future, it will continue to drag down overall performance [1][8].
• Pressure from Target Price Cuts
  : Multiple major banks have lowered their target prices, which may affect short-term stock price performance [5][6][9].

• AI Transformation Dividend
  : The commercialization progress of WPS AI and international market expansion are expected to open up new growth space [0].
• Share Repurchase Support
  : The company actively repurchases shares, showing management’s confidence in long-term value, which may support the stock price [0].

Kingsoft Corporation is currently in a business transformation period, with steady growth of office software business and short-term difficulties of game business coexisting. AI technology integration is the core direction of the company’s future development and the focus of market attention. Investors need to pay attention to the recovery of game business, the commercialization progress of AI business, and the effectiveness of international expansion.