Kuaishou may be exploring a more aggressive capital pathway for its most prominent AI asset. On May 11, market sources indicated that Kuaishou plans to spin off and list its AI video generation platform, Kling AI, by 2027, aiming to capitalize on the market's investment fervor for AI-related stocks. Reports suggest Kuaishou has already initiated discussions with potential investors for a pre-IPO funding round for Kling, with a valuation set at $20 billion. Kuaishou has not publicly commented on these reports.
Video generation large models are widely recognized as capital-intensive endeavors, facing significant computational cost pressures. A spinoff of Kling AI could represent the most pragmatic financial defense for Kuaishou during this phase of heavy capital consumption for large models. A prime example is OpenAI's announcement in March 2026 that Sora, which ignited a global race in AI video generation just two years prior, would be discontinued. This highlights the formidable challenges in the video generation field, where even leading global AI players struggle to sustain such financially draining projects.
The commercial return on AI products has become paramount. Kling AI has progressed relatively swiftly in monetization. In 2025, Kling AI generated total revenue of RMB 10.4 billion, approximately $1.5 billion. By January 2026, its annualized revenue run rate (ARR) had surpassed $3 billion. Cheng Yixiao, Founder and CEO of Kuaishou Technology, previously expressed strong confidence that Kling AI could achieve year-over-year revenue growth of over 100% in 2026, based on current momentum and commercialization progress.
In 2026, as global capital scrutinizes the return on investment for generative AI, the window for Kling AI to establish competitive barriers is narrowing. The competitive landscape for Kling AI is becoming unprecedentedly crowded, with direct and intense competition from similar products by giants like ByteDance, Google, and Alibaba.
Facing dual challenges of commercialization and technological advancement, Kuaishou undoubtedly requires increased funding. The company is continuously ramping up investments, with its total capital expenditure (Capex) for 2026 projected to reach approximately RMB 26 billion. The additional RMB 11 billion increase from 2025 is primarily allocated to computational power support for the Kling large model and other foundational models. As its user base expands, the computational pressure on Kling AI will continue to rise.
However, compared to these industry giants, relying solely on the cash flow from Kuaishou's short-video business to fund Kling would likely be insufficient. Therefore, by bringing Kling to the capital markets, Kuaishou not only offloads high R&D costs but also potentially locks in the peak valuation premium during the AI investment boom. For both Kuaishou and Kling, this potential spinoff may represent not merely a capital maneuver but a crucial battle in the ultimate challenge of commercializing large AI models.