Kuaishou Doubles Down on AI Video Generation as Kling AI Revenue Soars 200%
Amid macro pressure, Kuaishou leans into AI video and brand merchants, while acknowledging near-term revenue headwinds.
1024.HK · Earnings Call · 2026-08-19
A Strategic Pivot: AI Video Generation Takes Center Stage
Kuaishou Technology's second-quarter 2026 earnings call was dominated by one narrative: the company's AI strategy, specifically its video generation model Kling AI. The company reported total revenue of RMB 35.5 billion, up 1.4% year-over-year, but the real highlight was Kling AI's revenue of over RMB 850 million, up more than 200% year-over-year. This is a clear acceleration from previous quarters. “In Q2, Kling AI generated revenue of over RMB 850 million, up over 200% year-over-year, continuing to lead a global AI video commercialization.” — Yixiao Cheng, Co-Founder, Chairman and CEO · 2026-08-19 The company also launched several new products, including native 4K video output in Kling AI 3.0, which CEO Yixiao Cheng described as “the industry's first video generation model to support native 4K output.” — Yixiao Cheng, Co-Founder, Chairman and CEO · 2026-08-19 This positions Kuaishou at the forefront of the AI video generation segment, a relatively new keyword in the company's trajectory.Financing and Cash Flow: A New Flexibility
In the Q&A session, an executive confirmed that Kling AI recently completed an independent financing round. This is a significant development because it gives Kuaishou more flexibility in managing cash flow, particularly for computing power needs. The executive stated: “After the completion of Kling AI financing will have more flexibility in managing cash flow expenditures, including addressing additional computing power needs through leasing and other approaches.” — Unknown Executive, Executive · 2026-08-19 This could alleviate some of the pressure from the heavy AI investments that have weighed on profitability. Prior to this, in the March 2026 call, management had guided that Kling AI's revenue would more than double in 2026. The current quarter's 200% growth is on track to meet that expectation. “we are confident that Kling AI's revenue in 2026 will more than double.” — Unknown Executive, Management · 2026-03-25E-commerce and Merchant Strategy: Focus on Brands and Industry Zones
While AI is the headline, the company also addressed its e-commerce strategy amid a challenging macro environment. Management emphasized a shift towards supporting brand merchants and penetrating industry zones. They restructured merchant-facing teams to provide more tailored support. The company is also leveraging AI tools to help merchants reduce costs and improve efficiency, as echoed by help merchants appearing high in the keyword trajectory. The “merchants are seeking greater visibility and certainty in their business operations” — Unknown Executive, Executive · 2026-08-19 and the company is responding with tiered support and a focus on brand sustainability.Outlook: Near-Term Pressure, Long-Term AI Confidence
Despite the strong AI growth, management provides a cautious outlook for the second half. CFO Jin Bing noted that “we expect to face near-term challenges as pressure on revenue and our continued investment in AI, both weigh on profitability.” — Bing Jin, Chief Financial Officer (CFO) · 2026-08-19The company plans to maintain positive free cash flow in the second half, with CapEx front-loaded in the first half. Shareholder returns are also set to exceed last year's levels. In summary, Kuaishou is making a bold bet on AI video generation as its next growth engine, while navigating macro headwinds in its traditional e-commerce and advertising businesses. The success of Kling AI and its financing could be a game-changer, but the near-term challenges are real.While we face short-term revenue pressure and heavy investments -- AI investment, we will maintain our long-term focus and continue expanding the commercial exploration of AI to empower Kuaishou's content and commercial ecosystems.