Lyon: No extreme price wars expected in the short term in the mainland cloud market, KINGSOFT CLOUD's Gen AI revenue is expected to grow.

Lyon released a research report stating that some investors are concerned that there may be a price war in the mainland cloud market this year, and whether ByteDance's Volcano Engine will be a factor triggering the price war. The bank predicts that there will not be an extreme price war in the mainland cloud market in the short term, as all mainland network cloud manufacturers have experienced two years of losses or reduced low-profit businesses. The report indicates that last year's price reduction of Volcano Engine was jointly driven by usage and competitive considerations. ByteDance's AI strategy focuses more on application development rather than cloud services. Unless the strategic importance of cloud business in the ByteDance ecosystem increases and funding increases, it is unlikely to initiate a price war. In addition, Lyon expects KINGSOFT CLOUD's Gen AI revenue to grow by 60% to about 2 billion yuan this year, with incremental revenue mainly coming from Xiaomi's training demand in the field of autonomous driving, about 400 to 500 million yuan, and the expanding demand from AILLM startup companies, about 100 to 200 million yuan.