Kuaishou Stock at HK$31: Kling AI Revenue Triples While Profit Falls 30% — Is the Market Missing the AI Video Business?

Data as of September 11, 2026. Kuaishou is being priced like a mature social-video company at exactly the moment one of its smallest businesses is starting to look like a serious AI platform. The contradiction is visible in the second-quarter numbers. Total revenue rose only 1.4% year over year to RMB35.5 billion. Adjusted net profit fell to RMB3.9 billion from RMB5.6 billion. Gross margin declined to 51.6% from 55.7%.

Yet Kling AI, Kuaishou’s generative-video platform, produced more than RMB850 million of Q2 revenue and grew more than 200% year over year. For a product that barely existed a few years ago, that is no longer experimental revenue.

At around HK$31.50, Kuaishou’s market capitalization is roughly HK$137 billion and the shares trade at a single-digit trailing earnings multiple. That valuation suggests the market believes the mature short-video and livestreaming businesses will remain under pressure and that AI will not be large enough to change the economics.

I think that conclusion may be too simple. Kuaishou’s core platform is growing slowly, but it generates the data, distribution, creator network and cash flow required to fund one of China’s fastest-growing commercial AI products. The investment question is whether Kling becomes a meaningful second profit pool before competition and model costs absorb the opportunity.

Q2 was not a clean growth quarter

Kuaishou reported RMB35.5 billion of revenue, up only 1.4%. Online marketing services generated RMB20.6 billion, up 4.4%, while live-streaming revenue fell 13.5% to RMB8.7 billion. Other services increased 18.5% to RMB6.2 billion.

Profitability weakened. Gross profit fell to RMB18.3 billion from RMB19.5 billion, and gross margin declined by more than four percentage points. Adjusted net profit fell roughly 30% year over year to RMB3.9 billion. Domestic operating profit also declined.

Those numbers explain why the stock is cheap. Kuaishou is not currently producing the kind of broad-based growth that earns a premium internet multiple.

But the mix is changing underneath the headline.

Kling AI is becoming financially material

Kling AI generated more than RMB850 million of Q2 revenue, up more than 200% year over year. That means a generative-video product now represents more than 2% of group quarterly revenue.

Two percent may sound small, but the growth rate is the point. If Kling can continue scaling at even a fraction of the current pace, it can become a multi-billion-renminbi annual business quickly.

Kuaishou also launched Kling 3.0 Turbo and native 4K generation aimed at professional users in film, advertising and content production. The product is moving beyond consumer experimentation toward commercial workflows.

This is important because professional creative tools can support much higher willingness to pay than entertainment-only AI products.

The core platform still has enormous reach

Kuaishou averaged 412.3 million daily active users in Q2 and 797.3 million monthly active users. DAUs increased only 0.8%, but MAUs grew 11.5% year over year.

That user base matters for AI because Kuaishou does not need to build distribution from zero. It already owns a huge content ecosystem, creator community and advertising platform.

Kling can benefit from creators who need video-generation tools, advertisers who need lower-cost creative production and merchants who need more content for e-commerce.

This creates an advantage over standalone AI startups that may have excellent models but no built-in commercial distribution.

Advertising remains the economic backbone

Online marketing accounted for 58.1% of Q2 revenue and grew 4.4%. This is still the largest profit engine.

Kuaishou is using AI inside advertising as well as selling AI tools separately. Automated creative generation can help merchants produce more variations of ads, while recommendation improvements can increase conversion.

If AI makes Kuaishou’s advertising platform more efficient, part of Kling’s economic value may never appear as Kling-branded revenue. It may appear as stronger ad monetization.

That is one reason the AI opportunity should be judged on total commercial impact, not only one segment line.

Live streaming is shrinking — and that may be healthy

Live-streaming revenue fell 13.5% to RMB8.7 billion. Historically, livestreaming was a major source of Kuaishou revenue, but the business can be volatile and sensitive to regulation and creator economics.

A declining livestreaming mix is not automatically negative if advertising, e-commerce and AI grow faster. Those businesses can create a more diversified revenue base.

The problem in Q2 is that the replacement growth was not yet strong enough to prevent group revenue from slowing sharply.

Kling needs to keep scaling, and e-commerce monetization needs to remain healthy, for the mix transition to become clearly positive.

Why gross margin fell

Gross margin declined to 51.6% from 55.7% a year earlier. That is a meaningful deterioration.

AI investment is not free. Training and serving video-generation models requires compute, infrastructure and engineering talent. Kuaishou is also continuing to invest across content, e-commerce and recommendation systems.

The crucial question is whether these costs are temporary investment ahead of higher AI revenue or a permanent reset to lower margin.

If Kling’s revenue scales faster than compute costs, gross margin can recover. If competition forces prices down while model costs stay high, AI could become a revenue-growth story without strong returns.

AI video has unusually clear commercial use cases

Generative video differs from many consumer AI products because businesses already spend enormous amounts producing video content. Advertising agencies, merchants, studios and creators pay humans and software providers to make short-form content every day.

A tool that reduces production time from days to minutes has obvious economic value. The question is not whether customers will pay something. It is how much they will pay and how much compute the service consumes.

Kling’s native 4K capability is important because it moves the product toward professional workflows where quality requirements and budgets are higher.

The creator ecosystem gives Kling a natural laboratory

Kuaishou’s core platform can test AI video tools at enormous scale. Creators can use Kling to generate backgrounds, clips, effects and full videos. The company can then observe which features increase engagement and which outputs users actually value.

This feedback loop can improve both the model and the monetization strategy.

It also gives Kuaishou a data advantage. A company operating one of the world’s largest short-video platforms understands video consumption patterns in a way a pure model developer may not.

Competition will be brutal

Kling does not operate in a vacuum. OpenAI, Google, ByteDance and multiple Chinese AI companies are developing video-generation systems.

Model quality can converge quickly. If users can switch between products easily, pricing power may be weak.

Kuaishou therefore needs more than a good model. It needs workflow integration, creator distribution, enterprise relationships and proprietary data advantages.

The strongest moat would be an ecosystem where businesses create, distribute, advertise and monetize video inside the same platform.

Tencent offers a useful comparison

Our Tencent analysis shows a mature Chinese internet platform using AI to improve advertising, gaming and cloud services. Tencent has a much larger profit base and broader ecosystem.

Kuaishou is smaller and riskier, but Kling gives it a more direct consumer-and-enterprise AI product. That makes the upside more visible if commercialization continues.

Bilibili is another useful contrast

Bilibili is monetizing a deeply engaged video community through advertising and games. Kuaishou operates at a much larger scale and already has stronger profitability, but its user growth is more mature.

The AI difference is important: Kuaishou is not only using AI to recommend content. It is selling generative-video capability as a standalone product.

If Kling succeeds, Kuaishou may deserve a valuation framework that sits somewhere between a social platform and an AI software business.

HK$121 billion of available funds changes the risk profile

Kuaishou reported total available funds of RMB121.3 billion as of June 30. That is an enormous financial cushion relative to the company’s current market value.

This does not mean all of that capital is excess cash or immediately distributable. The figure includes cash, deposits and financial assets used in treasury management. But the scale still matters.

Kuaishou can fund AI research, buy back shares and endure a weaker advertising cycle without relying on emergency capital.

Buybacks are increasingly meaningful

During the first half and through August 19, Kuaishou repurchased more than 43 million shares for about HK$1.97 billion.

At a depressed valuation, repurchases can be highly accretive if the core business remains durable. The company is effectively buying a larger claim on future AI and platform cash flows for remaining shareholders.

Buybacks only create value if management is correct that the stock is undervalued. But at a single-digit trailing P/E, the hurdle is lower than it would be at a premium multiple.

The valuation is unusually low for an AI story

Kuaishou closed September 11 around HK$31.50. StockAnalysis placed market capitalization near HK$137 billion and enterprise value around HK$89 billion on September 10, with a trailing P/E around 7.7.

Those numbers are not what investors usually associate with a company whose AI product is growing more than 200%.

The discount exists because group profit is falling and core growth is weak. Investors are effectively treating Kling as an interesting side project rather than a future profit center.

That creates the central asymmetry. If Kling remains small, the stock may simply be a cheap mature social platform. If Kling becomes a multi-billion-renminbi high-growth business with attractive margins, today’s group valuation could look unusually low.

But AI revenue should not be valued like software yet

It would be a mistake to assign Kling a premium SaaS multiple without understanding its cost structure. Generative video can be compute intensive. Revenue growth alone does not tell us contribution margin.

I would want management to disclose more about paying users, enterprise mix, retention and unit economics over time.

The strongest bull case requires not just rapid Kling revenue growth but evidence that gross profit from AI scales faster than infrastructure spending.

Three scenarios for Kuaishou stock

What I would watch next

Kling revenue growth is the obvious metric, but gross margin is equally important. If Kling revenue rises while group gross margin keeps falling, investors need to question the quality of that growth.

I would also watch online-marketing growth, e-commerce monetization and overseas profitability. The mature platform must remain healthy enough to fund the AI opportunity.

Finally, continued buybacks at depressed prices could create substantial per-share value if earnings stabilize.

What would break the thesis?

The biggest risk is that video-generation models commoditize. If several platforms produce similar quality, price competition could erase much of the profit opportunity.

A second risk is weak core growth. Kling may grow rapidly but remain too small to offset declining livestreaming or advertising pressure.

A third risk is sustained margin compression from AI infrastructure costs. Revenue growth without economic returns would not justify a higher multiple.

My view on Kuaishou stock

Kuaishou at roughly HK$31 is one of the more unusual AI setups in China. The company is not an unprofitable startup priced on distant promises. It is a profitable social and advertising platform trading at a low earnings multiple while operating a generative-video business that already produces meaningful revenue.

Q2 was not strong enough to dismiss the risks. Group revenue grew only 1.4%, adjusted profit fell and gross margin contracted. The mature platform clearly faces pressure.

But Kling AI’s more-than-200% growth changes the optionality. If the business can scale toward several billion renminbi of annual revenue with healthy economics, investors may eventually stop valuing Kuaishou as only a mature short-video company.

At today’s valuation, the market appears to be paying very little for that possibility. That does not make the stock safe. It makes the outcome unusually dependent on whether AI video becomes a real profit pool rather than an expensive technology demonstration.

Sources

• Kuaishou — Q2 and Interim 2026 Results
• Kuaishou Investor Relations — Quarterly Results
• StockAnalysis — Kuaishou market capitalization and valuation

This article is independent analysis, not investment advice.