China's biggest tech companies are doubling down on AI-generated video. Alibaba Group Holding, Tencent Holdings, and Baidu have agreed to take stakes in Kuaishou Technology's Kling AI unit in a $2.8 billion funding round that values the startup at approximately $15 billion, according to sources familiar with the matter.
The fundraising — one of the largest AI financing rounds of the year — sees Kuaishou's stake in Kling dilute to about 68%. The investment arms of Alibaba, Tencent, and Baidu are among the new investors joining the round, which was capped at 20.45 yuan ($2.82) per share.
Kling AI has emerged as a formidable player in the AI video generation space, competing directly with OpenAI's Sora and other text-to-video models that have captured global attention. The unit posted revenue exceeding 650 million yuan ($89 million) in the first quarter of 2026, smashing market expectations by 29% and driving Kuaishou's shares up 15.9%.
Unlike its Western rivals, Kling AI benefits from deep integration with Kuaishou's existing short-video platform, which boasts over 700 million monthly active users. This gives Kling a massive distribution advantage and real-world testing ground for its AI models. Creators on the platform have already used Kling to generate millions of short videos, from advertising content to entertainment clips.
The investment signals that Chinese tech giants are willing to make bold bets on AI video as the next frontier, even as global competition intensifies. Kuaishou's ability to monetize AI through its existing ecosystem — rather than relying purely on subscription revenue like many Western AI companies — has made it particularly attractive to investors.
"Kling is not just a research lab; it's a revenue-generating business embedded in one of China's largest content platforms," said an analyst following the deal. "That's a combination that Alibaba and Tencent find very hard to ignore."
The massive fundraise comes amid a broader AI investment frenzy in China, where companies are racing to develop and deploy generative AI across every sector from video creation to drug discovery.
