Kuaishou Technology's Hong Kong-listed stock advanced on Thursday following news that Kling AI, the company’s spun-off artificial intelligence unit, attracted an initial $2 billion in venture capital funding.
At 22:11 ET (02:11 GMT), the shares climbed more than 6% to reach their highest closing level since June 23, outperforming a 1.7% gain in Hong Kong’s broader Hang Seng index. The market move reflected investor interest in Kling AI’s elevated valuation and growth trajectory.
Deal details and valuation
The new financing places a preliminary value on Kling AI of about $18 billion prior to the latest capital injection. The funding round has the potential to expand to approximately $3 billion if additional investors participate. If the round expands as described in the company statement, Kuaishou’s ownership in Kling AI would be reduced to roughly 68%.
Before this round, Kling AI had been valued at about $15 billion. Kuaishou has previously indicated it was considering restructuring Kling AI to admit outside investors, but said those deliberations were at an early stage and no definitive agreements had been executed.
Business model and recent performance
Kling AI develops generative artificial intelligence software capable of producing videos and short films from text prompts. The unit competes with other Chinese players in AI video generation, including ByteDance’s Seedance and the startup Shengshu, as firms vie to supply AI-created video content to filmmakers, advertisers and enterprise clients.
The unit has been among Kuaishou’s fastest-growing segments. Annual recurring revenue rose to about $500 million in March from $300 million in January after the rollout of Kling 3.0. For the first quarter, Kling AI reported more than 650 million yuan in revenue, roughly $96 million, representing growth of more than 300% from the year-earlier quarter.
Outlook and strategic intent
According to the company, the fresh capital is intended to underwrite continued product development and support Kling AI’s push into overseas markets, even as competition in the AI video-generation market intensifies. How the fundraising ultimately shapes ownership and execution will depend on whether the round expands and on the outcome of ongoing discussions.