Kuaishou Technology is moving to decouple its generative video powerhouse, Kling AI, from its core balance sheet. The short-video giant is reportedly finalizing a $3 billion funding round that values the AI unit at $18 billion, with long-time backer Tencent expected to participate. This capital injection serves as a precursor to an ambitious roadmap that includes a Hong Kong initial public offering within the next twelve months.
While the $18 billion valuation remains staggering, it reflects a nuanced recalibration by the market. Early internal targets had hovered around $20 billion, but investors are increasingly scrutinizing the high cost of inference and the clear path to sustainable enterprise revenue. By raising more capital at a slightly lower valuation, Kuaishou is prioritizing the massive liquidity required to secure the high-end GPUs and data center capacity essential for the next generation of video synthesis.
Kling AI is distinguishing itself from the sea of experimental AI 'toys' by demonstrating significant commercial traction. In the first quarter of 2026, the unit recorded revenue exceeding 650 million RMB, a threefold increase year-over-year. Beyond short-form social media clips, the model is being integrated into professional workflows, contributing to visual effects for major television productions like the domestic series 'Tai Ping Nian' and even generating sequences for Hollywood projects.
The strategic spinoff allows Kuaishou to insulate its primary earnings from the 'compute black hole' of AI development. As capital expenditures for AI infrastructure are projected to hit 26 billion RMB this year, offloading these costs to external investors while maintaining a strategic stake allows Kuaishou to protect its margins. The success of this move will depend on whether Kling can transition from a viral creative tool into the foundational infrastructure for the global film and advertising industries.