Alibaba and Tencent had a choice: build their own answer to Sora, or write a check to the company already winning China's AI video race. They wrote the check.
Kuaishou's AI video unit, Kling AI, has locked in close to $2.8 billion from investors that include two of its parent company's fiercest rivals. Alibaba and Tencent both wrote checks. So did Baidu. Instead of racing to build a competing Sora, China's three biggest tech platforms decided the smarter move was owning a piece of the one that's already winning.
According to Bloomberg, the round also pulled in Abu Dhabi's BlueFive Capital along with state backed vehicles including the Beijing Information Industry Development Investment Fund and the Beijing Artificial Intelligence Industry Investment Fund. Media and entertainment money showed up too, with Huace Film and TV and Mango Investment among the roughly 36 backers, according to Bloomberg's reporting. Tencent's contribution alone came to roughly $200 million, per TechNode. Kuaishou shares jumped on the news, CNBC reported on July 3, a sign investors read the deal as validation rather than dilution.
The math behind the round tells its own story. Kling AI was valued at about $15 billion before the new money came in, and Kuaishou has told the Hong Kong exchange it expects the post money figure to reach $18 billion once all 36 investors close within two months, according to Bloomberg and the South China Morning Post. The deal dilutes Kuaishou's stake in Kling to 68 percent. Caixin reports the company is now lining up a Hong Kong IPO for the unit as soon as mid 2027, which would make Kling one of the first standalone AI video businesses to go public anywhere.
That's a fast trip from feature inside a short video app to a company worth spinning off.
The numbers explain the rush. Kling AI's annualized revenue run rate hit $500 million in March 2026, up from roughly $240 million three months earlier, largely on the back of the Kling 3.0 model that launched in February and added multi shot storytelling, 15 second clips and native audio generation. First quarter revenue alone topped 650 million yuan, about $96 million, more than triple what it pulled in a year earlier.
Scale backs up the revenue. Kuaishou says Kling AI now counts more than 100 million registered users across 224 countries and roughly 50,000 enterprise clients, and the platform has generated over 600 million videos since its June 2024 launch. Those are the kind of numbers that make a $15 billion valuation look less like hype and more like arithmetic.
Here's what makes this deal different from anything happening in AI video outside China. In the US, OpenAI's Sora, Runway, Luma and Google's Veo are all racing each other, each backed by separate money, each trying to out model the others. You don't see Microsoft quietly investing in Runway, or Google writing a check to keep Luma afloat. Alibaba and Tencent just did the equivalent of that inside China, in the same week, and neither one blinked at helping a rival's subsidiary get stronger.
That's a deliberate strategy, not an accident. Rather than building three separate video models to chase Kuaishou's head start, Alibaba and Tencent bought exposure to the leader and kept their own AI budgets pointed elsewhere, Alibaba's Qwen models, Tencent's Hunyuan. Baidu, which has its own Ernie models, joined anyway. When your biggest competitors would rather invest in you than compete with you, that tells you something about how far ahead you actually are.
Frankly, that consolidation instinct might matter more than the dollar figure. Oracle's stock wobbled this week on questions about whether AI infrastructure spending is sustainable, and chip names took a similar hit. Kling's investors are betting the opposite way, on a single application layer winner instead of a pile of undifferentiated compute. Kuaishou now has roughly two months to close the remaining commitments and confirm the $18 billion post money number in its exchange filing.
Also read: Chip stocks tumbled this week as investors doubt the AI spending payoff • Singapore Will Train 60,000 Accountants to Use AI Within Three Years • ByteDance and Alibaba Are Killing Custom AI Companions Before China's New Law Bites
