Kuaishou's Kling AI: Can It Maintain Dominance in the AI Video Generation Race?

The AI video generation market is booming, and Kuaishou Technology's Kling AI has emerged as a major player, driving revenue growth and reshaping the company's ecosystem. But as competitors like Runway Gen-3 Alpha and Google Veo 2 refine their strategies, the question remains: Can Kling AI sustain its momentum and justify a revaluation of Kuaishou's stock?

The Rise of Kling AI: Revenue and Market Impact

Kuaishou's Kling AI has quickly become a cornerstone of its business. In Q1 2025, the platform generated over RMB150 million in revenue, with an annualized run rate surpassing USD100 million. By April and May, monthly subscription bookings exceeded RMB100 million, signaling scalability. The AI's integration into Kuaishou's core services—advertising, e-commerce, and live streaming—has been transformative. For instance, AI-generated marketing materials drove RMB30 million/day in ad spending, while e-commerce GMV surged 15.4% to RMB332.3 billion, aided by tools like AI scripts and product selection.

Globally, Kling AI's expansion has paid off. Overseas revenue rose 32.7% year-over-year to RMB1.3 billion, with Brazil's market becoming a profit driver. The platform's user base grew too: DAUs hit 408 million (+3.6% YoY), and time spent rose 5.9%, as Kling AI's multi-modal editing and campaigns (like Chinese New Year's 15 billion live views) boosted engagement.

Competitive Landscape: Where Does Kling AI Stand?

While Kling AI leads in motion quality and scalability, rivals are closing in. Runway Gen-3 Alpha targets luxury brands with cinematic tools like Motion Brush Technology, while Google Veo 2 dominates long-form storytelling via Extended Narrative Generation. Hailuo AI specializes in short-form social content, leveraging Platform-Specific Templates to attract TikTok-style advertisers. Higgsfield AI democratizes cinematic techniques, appealing to non-professionals.

Kuaishou counters by emphasizing enterprise scalability and physics simulation capabilities (e.g., fabric movement). Its API supports bulk video requests (up to 40 million/month), and partnerships with AWS and Alibaba Cloud ensure global infrastructure. Pricing tiers ($29/month) and free credits keep it accessible, while state evaluations rank it above OpenAI's Sora in realism.

Scalability and Valuation: Risks and Opportunities

Kling AI's success hinges on its ability to retain users amid rising competition. Key risks include:
1. Feature Saturation: Competitors like Runway and Hailuo are innovating in personalization and real-time generation.
2. High-Cost Markets: Luxury and enterprise segments may demand higher pricing, squeezing margins.
3. Regulatory Scrutiny: AI content moderation and data privacy could introduce compliance costs.

Yet, Kuaishou's ecosystem gives it an edge. Its 400 million users and deep integration into e-commerce and ads create a flywheel effect: more AI-generated content drives engagement, which attracts advertisers, boosting revenue. The stock trades at a P/S ratio of 2.5x, below peers like Meta (4.2x) and TikTok (3.8x), suggesting upside if Kling AI's growth accelerates.

Investment Thesis: Hold for Now, Buy on Dip

While Kling AI's revenue streams are promising, the market is crowded and evolving. Investors should monitor subscription retention rates and enterprise adoption metrics. If Kuaishou can sustain its 32.7% YoY overseas revenue growth and expand into untapped sectors (e.g., healthcare or education), the stock could revalue. However, near-term volatility is likely as competitors innovate.

Bottom Line: Kuaishou's AI-first strategy is paying off, but execution in high-margin segments will determine its stock's trajectory. For now, investors should hold, but consider adding on dips if competitive pressures ease. The AI video market's winner-takes-all dynamics mean Kling AI's scalability—and the company's agility—will decide its fate.