Kuaishou Technology, the primary rival to ByteDance’s Douyin in China, is reportedly moving to spin off its generative AI video unit, Kling AI, in a massive funding round that could value the entity at $20 billion. Sources close to the deal indicate that the short-video giant is seeking $2 billion in fresh capital, with incumbent backer Tencent among the high-profile investors currently in talks. This strategic maneuver suggests Kuaishou is ready to let its most promising technological asset operate with the agility of a standalone startup while offloading the heavy capital expenditures associated with training large-scale models.
The valuation target places Kling AI in the upper echelon of global AI unicorns, reflecting a market that is increasingly prioritizing commercial execution over mere technical promise. Kling AI’s financial trajectory has been notably steep, with an annualized revenue run rate (ARR) that reportedly climbed from $300 million in January to $500 million by late April 2026. Kuaishou CEO Cheng Yixiao has remained publicly bullish on the unit’s prospects, forecasting that revenue will more than double within the current fiscal year as the demand for high-fidelity AI video tools explodes among content creators and advertisers.
By pursuing a spin-off, Kuaishou is navigating the "AI dilemma" facing many diversified tech conglomerates: how to fund the exorbitant costs of compute and talent without dragging down the parent company’s earnings. A separate entity allows Kling to tap into external capital markets more freely and potentially seek a public listing down the road. This structure also enables Kling to offer its services to a broader range of enterprise clients who might otherwise view Kuaishou as a direct platform competitor.
Internationally, the move is seen as China’s most credible response to OpenAI’s Sora. While Sora remains in limited release, Kling has already integrated deeply into the Kuaishou ecosystem, proving its utility in producing realistic, physics-compliant video content at scale. If the $20 billion funding round closes, it will represent a significant vote of confidence in China’s ability to build vertically integrated AI products that are not only technologically sophisticated but also commercially viable within a short timeframe.