In a bold move to unlock shareholder value and capitalize on the generative AI frenzy, the Chinese short-video titan Kuaishou is reportedly planning to spin off its video-generation arm, Kling AI. The proposed deal aims to raise $2 billion in fresh capital, valuing the fledgling AI unit at a staggering $20 billion. If the transaction proceeds, Kling AI would emerge as the world’s most valuable independent video-generation product, placing it at the vanguard of the global AI arms race against competitors like OpenAI’s Sora.
The most striking aspect of this valuation is the narrow gap between the subsidiary and its parent. With Kuaishou’s total market capitalization currently hovering below $29 billion on the Hong Kong Stock Exchange, the $20 billion price tag for Kling suggests that investors view the AI unit as the company’s primary engine of future growth. This internal valuation disparity highlights a broader trend in the tech sector, where legacy social media and e-commerce operations are being increasingly eclipsed by the perceived limitless potential of proprietary large models.
Kling AI’s financial performance appears to justify the hype. The unit has reportedly achieved an Annual Recurring Revenue (ARR) of $500 million, a figure that has doubled since early 2026. This rapid monetization is a rarity in the generative AI space, where many high-profile projects remain deep in the red. Negotiations are currently underway with high-profile backers, including the social media and gaming behemoth Tencent, though the deal has not yet reached a final close.
The strategic decoupling of Kling from Kuaishou serves multiple purposes. By operating as an independent entity, Kling can attract a different class of venture capital that might otherwise be deterred by the regulatory or competitive baggage of a massive social media platform. Furthermore, it allows the AI unit to move with the agility of a startup while still leveraging Kuaishou’s massive proprietary datasets—fuel that is essential for refining high-fidelity video synthesis.