- Kuaishou’s AI video unit Kling AI has closed a fundraising round of nearly $3 billion, backed by Alibaba, Tencent and Baidu, at an $18 billion post-money valuation
- Kling AI’s first-quarter revenue hit 650 million yuan ($96 million), up over 300% year on year, with its annualised run rate reaching $500 million in March
- The round arrives weeks after OpenAI shut down Sora’s consumer app and Runway pivoted away from commercial video, leaving Kling AI as one of the few AI video players with real revenue behind its valuation
OpenAI shut down the consumer version of Sora in April 2026 after it burned through roughly a million dollars a day in compute against just $2 million in total revenue. In the same window, China’s Kling AI was quadrupling its own revenue. Now Alibaba, Tencent and Baidu are betting nearly $3 billion that it can keep doing that at scale.
Kuaishou Technology disclosed in a Hong Kong exchange filing on July 2, 2026, that investors have committed over 19 billion yuan ($2.8 billion) to Kling AI at a $15 billion pre-money valuation, with the round capped at 20.45 billion yuan, or roughly $3 billion, once remaining investors join.
That puts the deal’s post-money valuation at approximately $18 billion, according to a Reuters report confirming the round has effectively closed with 38 investors, including Tencent, Alibaba Cloud, Baidu, CITIC Securities and Industrial and Commercial Bank of China. The raise dilutes Kuaishou’s stake in Kling AI from 100% to about 68%.
Why investors are paying up
Kuaishou spun Kling AI out of its short-video platform, one of China’s largest, turning an internal research project into a standalone AI video business within roughly two years. The startup, founded inside Kuaishou and now operating as a semi-independent unit, works by generating video from text prompts and images, putting it in direct competition with OpenAI’s Sora, Runway and Google’s Veo.
Unlike many AI video challengers still burning cash on demo reels, Kling AI has commercial numbers to point to. Its 650 million yuan ($96 million) in first-quarter revenue was more than quadruple the year-earlier figure, and its annualised run rate reached roughly $500 million in March, up from $300 million in January.
That combination of growth and built-in distribution through Kuaishou’s platform is what pulled in strategic buyers rather than pure financial ones.
Tencent, notably, is investing $200 million despite owning Hunyuan, a rival video model, a sign of how much conviction has shifted toward commercial traction over model pedigree.
A widening gap with the West
The competitive backdrop has moved fast in Kling AI’s favour. Sora’s shutdown and Runway’s pivot toward robotics and gaming have opened space in commercial AI video that both Kling AI and startups like Higgsfield are racing to fill. Higgsfield is chasing that opening through enterprise ad and content budgets; Kling AI’s edge is a distribution network none of its Western rivals can replicate inside China.
The raise also lands alongside reports that Kuaishou plans to start a Hong Kong listing process for Kling AI within twelve months, with proceeds earmarked for compute and data centre buildout.
The global AI video generator market was valued at roughly $788.5 million in 2025 and is projected to reach $3.4 billion by 2033, a 20.3% compound annual growth rate, according to Grand View Research.
Whether Kling AI’s revenue keeps compounding once the novelty wears off, or whether it eventually runs into the same cost curve that sank Sora’s consumer play, is the question this round doesn’t answer. What it does confirm is that China’s biggest platforms would rather own a piece of that answer than watch it play out from the sidelines.
