Kuaishou Technology is reportedly preparing to spin off its generative video division, Kling AI, in a move that would value the unit at a staggering $20 billion. Sources close to the negotiations indicate that the short-video giant is seeking to raise $2 billion in a new funding round, with Chinese social media behemoth Tencent among the prominent investors in talks. While official representatives for Kuaishou and Tencent have declined to comment, the aggressive valuation underscores the soaring market confidence in China’s ability to compete in the global generative AI race.
The commercial momentum behind Kling AI has been remarkably swift. By the end of April 2026, the unit’s annual recurring revenue (ARR) reached $500 million, a substantial leap from the $300 million reported just months earlier in January. This rapid scaling aligns with the strategic vision of Kuaishou CEO Cheng Yixiao, who previously informed investors that the company expects Kling’s revenue to more than double within the current fiscal year.
A separate corporate structure for Kling AI would allow the unit to operate with the agility of a startup while insulating Kuaishou’s primary short-video business from the massive capital expenditures required for large-model training. This strategy mirrors similar moves by other global tech titans who are seeking to monetize their internal AI research departments as standalone commercial entities. By positioning Kling as an independent player, Kuaishou aims to attract specialized capital and talent necessary to rival OpenAI’s Sora on the international stage.
As the battle for AI-generated content dominance intensifies, Kling has emerged as one of the few viable Chinese contenders capable of producing high-fidelity, long-form video. The success of this fundraising effort will be a bellwether for the broader Chinese AI sector, testing whether high-growth projections can be sustained amid tightening hardware constraints and a crowded domestic market. The inclusion of Tencent as a potential backer further suggests a consolidation of interest among China’s internet elite to secure a foothold in the next generation of digital media.