Answer: While there are three different reasons given for why we cover our challa while reciting kiddush, some argue that not all of these reasons necessarily apply to covering cake, too.
Tosafos (Pesachim 100b) writes that one reason for covering the challa is to highlight the importance of kiddush. In the times of the Gemara they would wait until after kiddush to bring in the food, though now we simply cover the challa instead. Additionally, the covering serves to remind us of the man that fell between layers of dew to preserve it. The Piskei Teshuvos (271:n193) points out that both these reasons apply specifically to challa rather than cake. R’ Mordechai Leib Winkler (Levushei Mordechai OC 1:46) adds that the table would only be brought out on Friday night and not the following day for Shabbos lunch. Thus, this reason wouldn’t apply to kiddush during the daytime.
The Aruch Hashulchan (OC 299:14), however, writes that the main reason why we cover the challa is so as not to embarrass it. The Rosh (Pesachim 10:3) and Tur (OC 271:9) quote the Gemara Yerushalmi that teaches that as wheat is listed before wine in the shivas haminim, the beracha for bread should ideally be recited before the beracha for wine (See Mishna Berura 271:41). Based on this, the Kitzur Shulchan Aruch (55:5) and R’ Winkler (ibid.) write that when one is having cake at a kiddush, one would still need to cover it.
R’ Binyamin Zilber (Az Nidberu 2:8), however argues that this reason only applies to challa which one could, if necessary, use for kiddush. As one can’t use cake for kiddush, the acharonim never mentioned the necessity to cover cake.
Similarly, the Piskei Teshuvos (271:19) quotes various poskim who write that covering cake isn’t as important as covering one’s challa.
In conclusion, if one is reciting kiddush and having some cake at home, one should ideally cover the cake. At shuls where it isn’t easy to do so, the minhag is not to.