Kuaishou Technology: A High-Conviction Play on AI-Driven Earnings Growth and Profitability Expansion

Kuaishou Technology (1024.HK) has emerged as a standout performer in China’s AI-driven tech sector, leveraging its proprietary large AI models to unlock new revenue streams while maintaining robust profitability. As generative AI transitions from experimental tools to commercial engines, Kuaishou’s strategic investments in platforms like Kling AI and Keling AI are not only reshaping its business model but also reinforcing its margins in an increasingly competitive landscape.

Strategic AI Commercialization: From Tools to Ecosystems

Kuaishou’s AI commercialization strategy in 2025 has centered on two pillars: enhancing model capabilities and expanding integration across core business segments. The launch of the Kling AI 2.1 model series in early 2025 marked a pivotal step, offering creators advanced features such as motion performance optimization, physical simulation, and semantic responsiveness. These upgrades enabled users to generate both standard and high-quality videos at scale, directly boosting engagement and monetization opportunities [2].

The company further solidified its position by launching a dedicated Kling AI app in July 2025, which introduced real-time collaboration and intelligent creation assistance. This move democratized access to AI tools for content creators, driving adoption and fostering a vibrant ecosystem. By Q2 2025, Kling AI’s revenue had already surpassed RMB250 million, a testament to its commercial viability [3].

Beyond content creation, Kuaishou has embedded AI into its e-commerce and marketing platforms. Large language models now power product information extraction and user preference modeling, improving user-product matching efficiency by 20% year-over-year. This has directly fueled e-commerce GMV growth, which hit RMB334.2 billion in Q3 2024, up 15.1% year-over-year [3]. Similarly, AI-driven marketing tools have enhanced click-through and conversion rates, contributing to the 56.6% revenue share of online marketing services in Q3 2024 [3].

Earnings Growth and Margin Resilience: A Dual Engine

Kuaishou’s financial performance in 2025 underscores the effectiveness of its AI-driven strategy. Total revenue in Q2 2025 rose 13.1% year-over-year to RMB35 billion, with an adjusted net profit of RMB5.6 billion and a 16% margin—a record high for the company [1]. This outperformed Q1 2025 results, where revenue grew 10.9% year-over-year with a 14% adjusted margin [2].

The company’s overseas operations have also turned a corner, reporting a 32.7% year-over-year revenue increase in Q2 2025 and achieving operational profitability [2]. This reflects the scalability of Kuaishou’s AI tools, which are now localized for international markets.

Gross margin resilience is another standout feature. In Q3 2024, Kuaishou’s gross profit margin expanded to 54.3%, up from 51.7% in the same period of 2023, driven by AI-driven cost efficiencies in content moderation and logistics [3]. The domestic segment’s operating profit of RMB3.5 billion in Q3 2024 further highlights the company’s ability to balance growth with profitability [3].

Future-Proofing the AI Playbook

Looking ahead, Kuaishou is accelerating the commercialization of Keling AI, its generative AI platform. By Q3 2025, Keling AI had served 5 million users, generating 51 million videos and 150 million images—with monthly revenue exceeding RMB10 million [1]. The platform’s version 1.5, launched in September 2025, introduced native 1080P video support and motion brushes, addressing high-end creator demand [1].

A critical differentiator is Kuaishou’s development of a Mixture-of-Experts (MoE) version of its Kuaixi large model, which promises to enhance performance while reducing computational costs [1]. This innovation could further compress margins in the long term, as AI infrastructure becomes more efficient.

Management has also signaled confidence in Keling AI’s revenue trajectory, with over RMB100 million in revenue generated by Q4 2024 [4]. As the platform expands into enterprise solutions via API services, its contribution to total revenue is expected to grow exponentially in 2026.

Conclusion: A High-Conviction Bet on AI Synergy

Kuaishou Technology’s dual focus on AI commercialization and margin resilience positions it as a high-conviction play in the AI era. By transforming its platforms into AI-powered ecosystems, the company is not only driving top-line growth but also fortifying its profitability through cost efficiencies and scalable monetization models. With Kling and Keling AI already generating hundreds of millions in revenue and margins trending upward, Kuaishou’s stock offers compelling upside for investors seeking exposure to China’s next-generation tech leaders.

Source:
[1] Kuaishou Technology Announces Second Quarter and Interim 2025 Unaudited Financial Results [https://www.prnewswire.com/news-releases/kuaishou-technology-announces-second-quarter-and-interim-2025-unaudited-financial-results-and-declares-a-special-dividend-302535633.html]
[2] Kuaishou Technology Earnings Call Transcript Q2 2025 [https://www.roic.ai/quote/1024.HK/transcripts/2025-year/2-quarter]
[3] KUAISHOU TECHNOLOGY (KSHTY) Q2 FY2025 Earnings Call [https://finance.yahoo.com/quote/KSHTY/earnings/KSHTY-Q2-2025-earnings_call-337698.html]
[4] Kuaishou Turns to AI—and Kling—to Stay Sticky in a Flatlining Market [https://kr-asia.com/kuaishou-turns-to-ai-and-kling-to-stay-sticky-in-a-flatlining-market]