Kuaishou to Spin Off Kling AI Unit at $20 Billion Valuation

Kuaishou is spinning off its AI video unit, Kling, in a move that could intensify competition with rivals like OpenAI's Sora.

Kuaishou Technology plans to demerge its Kling AI video generation business for a 2027 listing, seeking to raise $2 billion at a target valuation of $20 billion. The move would create a formidable competitor in the burgeoning AI video sector, pitting Kling against established players and other well-funded startups.

"We are confident that Kling AI's revenue will record substantial YoY growth in 2026," Kuaishou CEO Cheng Yixiao said, signaling the company's high expectations for the standalone entity.

The company is already in discussions with potential investors, including Chinese tech giant Tencent Holdings. Kling AI has demonstrated rapid growth, with its annual recurring revenue (ARR) exceeding $300 million as of January and reaching $500 million by the end of April, according to sources.

The spinoff is a strategic move by Kuaishou to unlock shareholder value by creating a pure-play AI company that can attract higher valuation multiples. The fresh capital injection would also fuel Kling's research and development, helping it to compete more effectively with rivals such as OpenAI's Sora, Pika, and Runway ML. The AI video generation market is heating up, with major tech companies and startups vying for a slice of what is expected to be a multi-billion dollar market.

For Kuaishou, the demerger allows it to focus on its core short-video business while still retaining a significant stake in a high-growth AI venture. For investors, the listing of Kling AI will offer a new opportunity to invest in the rapidly evolving AI video landscape. The $20 billion valuation target, if achieved, would make Kling one of the most valuable AI startups in the world.

This article is for informational purposes only and does not constitute investment advice.