China's Kuaishou Plans Spinoff of AI Unit That Could Be Valued at $20 Billion

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Abstract generation in progress

By Raffaele Huang and Tracy Qu

Chinese short-video company Kuaishou Technology is planning to spin off and list its generative AI unit, which could fetch a valuation of $20 billion, according to people familiar with the matter.

The company is in talks with prospective investors–including Chinese tech giant Tencent, a major shareholder of Kuaishou–to raise around $2 billion for its Kling unit, the people said.

Kuaishou aims to list Kling in Hong Kong next year, they added.

The move comes as Kuaishou, which operates the second-largest video-sharing platform in China, strives to capitalize on the boom in AI models that can create images and video.

In a filing on Tuesday, the company said that it is assessing a proposal to restructure Kling that could involve external funding. The proposal is still in the preliminary stages and may not proceed, it said.

Kuaishou didn’t disclose further details. The Information had earlier reported on the company’s plan.

China’s AI sector is in the midst of a fundraising frenzy, with firms racing to tap investor appetite before sentiment turns. Baidu’s chip unit, Kunlunxin, has filed for a Hong Kong IPO, while AI unicorns Moonshot AI and StepFun are also preparing to go public.

Kling has gained popularity thanks to its frequent product updates and affordable pricing. It has developed a series of AI models used to produce movies, ads and social-media content, competing with video-generation tools offered by Google, New York-based Runway AI and TikTok parent ByteDance.

Kling’s annual recurring revenue–a key metric for subscription-based services–had reached $500 million in May from $150 million in December, one of the people said. It counts the U.S., Europe and Japan among its biggest markets outside China.

Kuaishou’s Hong Kong-listed stock rose as much as 11% Tuesday morning before paring gains. The stock was last up 3.1%, outperforming the Hang Seng Tech Index’s 0.4% decline.

Spinning Kling off is a logical move for Kuaishou, given the business’s leading position in the industry and generally strong sentiment toward AI stocks, Citi analysts said in a note.

Write to Raffaele Huang at raffaele.huang@wsj.com and Tracy Qu at tracy.qu@wsj.com

(END) Dow Jones Newswires

May 12, 2026 02:29 ET (06:29 GMT)

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