Kuaishou Technology, the Chinese short-video platform that has spent the past 18 months reinventing itself as an artificial intelligence company, is planning to spin off Kling, its AI video generation tool, as a standalone business valued at $20 billion.
The planned separation would turn Kling from an internal product line into a distinct entity with its own corporate structure, investor base and, presumably, its own path to an eventual listing.
For Kuaishou, the logic is straightforward: Kling has been the primary driver of the company's share price rally over the past year, and separating it allows investors to value the AI business independently of Kuaishou's maturing short-video and e-commerce operations.
The $20 billion figure is ambitious for a business that generated approximately 1.04 billion yuan ($150 million) in revenue in 2025. Kling's annualised revenue run rate climbed above $300 million by January 2026, implying rapid growth, but the gap between current revenue and the proposed valuation is substantial, representing a multiple of roughly 65 times trailing sales.
Kling launched in June 2024 using the same DiT architecture that underpins OpenAI's Sora, and has since accumulated more than 60 million users globally and connected with over 30,000 enterprise clients through its API.
The tool generates video from text prompts and still images, and has found commercial traction in marketing, e-commerce product videos, and film and television production.
By the fourth quarter of 2025, AI-generated marketing materials created through Kuaishou's platform were driving 4 billion yuan in advertising consumption, with conversion rates 20% to 30% higher than manually produced content.
The spinoff arrives at a complicated moment. Kuaishou announced in March that it would invest 26 billion yuan ($3.8 billion) in Kling and related AI infrastructure in 2026, a figure that exceeds the company's entire 2025 adjusted net profit of 20.6 billion yuan.
The announcement triggered a 14% single-day drop in Kuaishou's share price as investors questioned whether the returns from AI video generation could ever justify that level of spending.
The competitive pressure is equally intense. ByteDance, Kuaishou's larger domestic rival, launched Seedance 2.0 in February 2026, embedding the video generation tool into its Doubao AI assistant and the globally popular CapCut editing app.
Third-party data showed Seedance reaching roughly 45 million monthly active users during the Chinese New Year period, nearly four times Kling's user base over the same stretch. The launch effectively wiped out the share price premium Kuaishou had built on the back of Kling's early momentum.
Internationally, Kling competes with OpenAI's Sora, Google DeepMind's Veo and a growing field of startups, including Runway and Pika Labs, all of which are pursuing the same market for AI-generated video content.
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The technology is advancing rapidly, but no company has yet demonstrated that AI video generation can sustain the kind of margins that would justify a $20 billion standalone valuation.
For Kuaishou, the spinoff is a bet that separating Kling from the parent company's slowing core businesses will unlock value that the market is currently discounting. For investors, the question is whether $20 billion for a product generating $300 million in annualised revenue reflects genuine commercial potential or the kind of AI-era valuation enthusiasm that tends to correct sharply when growth decelerates.
The recap
- Kuaishou plans to spin off Kling AI video unit.
- The company announced a $20 billion valuation for Kling.
- Details were disclosed in a company announcement by Kuaishou.
