Alibaba, Tencent and Baidu are backing Kuaishou's Kling AI because the video model has become too important to fight from the sidelines. The money is also a reminder that Beijing doesn't want one of China's strongest AI assets financed on American terms.
Alibaba and Tencent have joined a $2 billion financing round for Kuaishou's Kling AI, according to a Bloomberg report published July 2. Baidu is also taking part, and the round values the video generation unit at roughly $15 billion before the new money comes in. Back in April, Kuaishou had been floating a spinout valuation closer to $20 billion.
That lower number is not the main story. The main story is who is writing the check.
Alibaba already has Wan, also called WanX. Tencent has Hunyuan. Baidu has been trying to keep its own AI stack relevant since Ernie became the company's public answer to OpenAI. Yet all three are now putting money behind Kling, a product owned by Kuaishou, the Beijing-based short video company best known outside China for Kwai. When your rivals fund you, you should pay attention. It usually means the market has chosen a leader before the companies involved are ready to say so out loud.
Kling has done more than win attention on demo clips. Kuaishou launched the model in June 2024 through its Kuaiying video editing app, and the business has since become one of the few AI video products with revenue large enough to talk about without squinting. The unit had an annualized revenue run rate near $500 million this spring, roughly twice its level before Chinese New Year, according to earlier reporting cited in the deal coverage. First-quarter 2026 revenue was above 650 million yuan, about $96 million, and roughly three quarters of that came from customers outside China.
Those numbers explain why this is not just another AI funding round. You can argue about model rankings, generation quality and whether a five-second clip means much for real production work. You can't argue with customers paying from the US, Europe and Japan while the product is still young. That is the useful signal in a market full of lab claims.
Beijing changed the financing math
Bloomberg reported in June that General Atlantic, the US private equity firm known for early bets on companies including Meta and Uber, had been in talks to lead a $2 billion round for Kling at about an $18 billion valuation. On paper, that would have been a clean way for Kuaishou to bring in global capital before a possible Hong Kong listing. In practice, it landed inside a much harsher political moment.
China ordered Meta in April to unwind its roughly $2 billion acquisition of Manus, the Chinese-founded AI agent startup, after regulators said the deal raised national security and technology transfer concerns. Bloomberg has also reported that Chinese regulators have told domestic AI companies to seek clearance before taking American capital. Frankly, after Manus, a US investor leading the round for one of China's most valuable AI video businesses was always going to be difficult.
So Alibaba, Tencent and Baidu stepping in looks less like a warm show of confidence and more like a practical answer to a problem Beijing helped create: keep the money coming, but keep control closer to home. That matters if you're watching how Chinese AI companies finance themselves. The old playbook of raising from big US names, scaling globally, then listing wherever the window opens is much harder when the asset is considered strategic technology.
Kling is competing on price as much as quality
Kling isn't winning by default. ByteDance's Seedance, Shengshu AI's Vidu and Alibaba's Wan are all serious competitors, and Runway's Gen-4 remains a strong US-built model in the same fight. Artificial Analysis rankings cited by market watchers have repeatedly put Chinese video models near the top of the field, which fits what users can see in the product market: China is not merely copying Sora. It is making cheaper, faster tools that people outside China are willing to use.
OpenAI's own retreat makes that more visible. The company said in March that it would discontinue Sora as a consumer app and API, with the app shutting down in April and the API scheduled to end in September. Business Insider reported that OpenAI pointed to growing compute demands and a shift toward world simulation research for robotics. That is a useful reminder for anyone building video models: good output is only half the business. The other half is whether you can afford to serve it.
Kling's advantage is that Kuaishou already knows video distribution, creator tools and consumer behavior. Alibaba and Tencent know cloud infrastructure, payments, ads and enterprise customers. Baidu has spent years trying to turn AI research into a commercial platform. Put those interests around one Chinese video model, and the shape of the race changes. Google can push Veo. OpenAI can return with another product. Runway can keep chasing high-end creators. But Kling now has capital, domestic political cover and a revenue base outside China.
Kuaishou still plans to take Kling public in Hong Kong, with a filing possibly coming as early as 2027. The eventual price may be $15 billion, $18 billion or something else once the round is finished and foreign participation is clearer. For now, the useful fact is simpler: Alibaba, Tencent and Baidu decided it was better to own part of Kling than merely compete against it.
Also read: Jersey Mike's Mentioned AI 22 Times In Its Billion Dollar IPO Filing, Blackstone's QTS Walks Away From Its Massive Virginia Data Center Project, and Crusoe is raising billions to prove investors still believe in AI's buildout
