As the global race for AI video generation intensifies, Kuaishou is reportedly preparing to spin off its Kling AI division in a deal that could value the unit at around $20 billion.
The planned spin-off would pave the way for fresh outside funding, with reports saying that the company is seeking about $2 billion from investors ahead of a potential 2027 listing in Hong Kong. The financial figures associated with this move indicate growing investor interest in companies developing AI tools that can compete on the global stage.
It also reflects the funding landscape for Chinese AI companies.
Kling AI’s global ascent
Launched in 2024, Kling AI has quickly gained attention for its text-to-video and image-to-video capabilities, competing closely with Google’s Veo and ByteDance’s Douyin, as well as other advanced video-generation tools. It has quickly gained momentum, with rapid evolution and higher-quality releases, turning it into one of the world’s most widely used AI video-generating tools.
Kling AI’s affordable video and image-generation tools have attracted creators, advertisers, and businesses across China, the US, Europe, and Japan. As adoption grows, Kling is emerging as a commercially viable product with standalone monetization potential.
During March’s earnings call, Kuaishou CEO Cheng Yixiao highlighted its financial growth, which, as of January, was at $300 million in Annual Recurring Revenue (ARR) and $500 million in May.
Yixiao noted that Kling AI’s current ARR is expected to “more than double” this year, a clear indicator of both insider confidence and long-term market acceptance.
That steady growth is now changing how investors and analysts frame and evaluate Kling AI’s long-term prospects with their recent focus on its potential as an independent value driver. This has led to the conversations moving beyond product capability amid fierce global competition towards questions of scale, financial support, and strategic backing.
A billion-dollar IPO following China’s fundraising trend
According to a report by the Wall Street Journal, many Chinese AI companies are currently “in the midst of a fundraising frenzy,” which means Kuaishou’s plan for an IPO is part of a larger trend among Chinese AI firms.
The company plans to list Kling AI in Hong Kong next year and is currently in discussions with potential investors, with progress at a preliminary stage. One of the potential investors Kuaishou is in talks with is Tencent, which is already a major shareholder in the company.
For now, the reported spin-off remains preliminary. But if Kuaishou can secure major outside backing, Kling AI could become one of the clearest tests of whether China’s AI video companies can turn viral product momentum into standalone public-market value.
Related reading: For more on China’s AI ambitions, read eWeek’s coverage of its AI-powered lunar robot planned for the 2029 Chang’e-8 moon mission.