Kuaishou's AI Ambition: Can Kling Drive a Content-Creation Revolution?

Kuaishou, the Chinese social media giant, has staked its future on AI as a transformative force in content creation. Its Kling AI platform—launched in June 2024—has emerged as a critical battleground in the race to dominate AI-driven video tools. While skeptics dismiss its near-term financial impact, the data tells a different story: Kling's rapid monetization, strategic enterprise partnerships, and underappreciated market share suggest Kuaishou could be building a long-term infrastructure play with significant valuation upside. Here's why investors should take notice.

The Monetization Machine

Kling AI's revenue trajectory defies expectations for an early-stage AI tool. By March 2025, its Annualized Revenue Run Rate (ARR) surpassed $100 million, growing from zero to this milestone in just 10 months. Subscription revenue, which accounts for 70% of Kling's top line, has surged. Monthly bookings for individual prosumer subscriptions—priced at RMB 66–666 (USD $9–$93) tiers—surpassed RMB 100 million ($13.9 million) in April and May 2025 alone. Corporate API usage, driven by over 10,000 enterprise clients in sectors like advertising, gaming, and film, contributes the remaining 30% (see Figure 1).

Crucially, Kling's growth isn't just about volume. Its user base has exploded to 22 million globally (a 25-fold increase in 11 months), while prosumers generated 168 million videos in its first year—averaging one video every 0.6 seconds. This scale hints at a network effect: more creators feed data into Kling's algorithms, improving quality and attracting even more users.

While Kuaishou's shares have lagged peers like Alibaba and Tencent in recent quarters, its AI division is flying under the radar. At current growth rates, Kling could hit $150–200 million ARR by early 2026, potentially representing 2–3% of Kuaishou's total revenue (which stood at $17.6 billion in 2024).

A Battle for AI Supremacy

Kuaishou faces fierce competition from global tech giants like Google (with its Gemini series) and OpenAI, but it has carved a niche in video-centric AI tools—a market underserved by text-focused rivals. Spring 2025 reports estimate Kling holds a 30% share of the text-to-video market, thanks to its 20+ iterations of the model and upgrades like the Kling AI 2.1 series. This version introduced cost-effective modes (Standard 720p, High-Quality 1080p) and a premium Master Edition, appealing to both casual creators and enterprise clients demanding scalability.

Enterprise adoption is a key moat. Kuaishou's NextGen Creator Program—enlisting 15,000+ global creators—and partnerships with cloud providers like AWS and Alibaba Cloud position Kling as a go-to solution for video-heavy industries. This contrasts with OpenAI's focus on text and Google's broader Gemini suite, where video tools remain secondary.

Valuation: Underappreciated Growth?

Kuaishou's stock trades at a P/S ratio of 2.5x, well below peers like Meta (5.1x) and Alibaba (3.8x). Yet Kling's potential is underpriced. Even if Kling contributes just 5% of total revenue by 2026—a conservative estimate—its growth could add $880 million to Kuaishou's top line. At a 5x P/S multiple, that's $4.4 billion in valuation uplift, or ~10% of Kuaishou's current market cap.

The market's skepticism stems from Kling's small current contribution (<1% of 2024 revenue) and fears of commoditization. But video AI is still in its infancy, and Kuaishou's head start in infrastructure (e.g., 40 million API requests by Q1 2025) could lock in customers.

Risks vs. Reward

The risks are clear. Pricing pressure could emerge as rivals undercut fees, and regulatory scrutiny over AI safety remains a wildcard. Kuaishou also faces execution hurdles: its current ARR of $100 million is still dwarfed by Google's $3 billion cloud AI revenue target.

Yet these risks are offset by Kling's strategic value as an AI infrastructure play. Video content drives ~80% of internet traffic, and enterprises are hungry for tools to automate production. Kuaishou's focus on cost-effective tiers (e.g., Standard 720p at lower prices) could capture both SMBs and large enterprises scaling up.

Final Take: A Strategic Buy

Kuaishou's stock offers a compelling risk-reward profile for investors willing to look beyond quarterly noise. While Kling's revenue is small today, its 25x user growth, 30% market share, and strategic enterprise partnerships suggest it's building a moat in AI video—a $20–30 billion addressable market by 2027.

The key catalysts ahead are Kling AI 3.0 (expected in 2025–26), which could further differentiate the platform, and enterprise revenue diversification. At current valuations, Kuaishou's shares are pricing in a worst-case scenario. For investors with a multi-year horizon, this is a buy—a chance to own a pioneer in the AI content revolution at a discount.

As the world shifts to video-first content, Kuaishou's bet on AI isn't just a side project—it's the engine of its next growth phase. The skeptics may yet be proven wrong.