Kling AI closes $3B round at $18B valuation as Alibaba and Tencent back China’s Sora rival: report — TFN

• Kuaishou’s AI video unit Kling AI has closed a fundraising spherical of practically $3 billion, backed by Alibaba, Tencent and Baidu, at an $18 billion post-money valuation 

• Kling AI’s first-quarter income hit 650 million yuan ($96 million), up over 300% yr on yr, with its annualised run charge reaching $500 million in March

• The spherical arrives weeks after OpenAI shut down Sora’s shopper app and Runway pivoted away from business video, leaving Kling AI as one of many few AI video gamers with actual income behind its valuation

OpenAI shut down the patron model of Sora in April 2026 after it burned via roughly 1,000,000 {dollars} a day in compute in opposition to simply $2 million in whole income. In the identical window, China’s Kling AI was quadrupling its personal income. Now Alibaba, Tencent and Baidu are betting practically $3 billion that it will possibly maintain doing that at scale.

Kuaishou Technology disclosed in a Hong Kong alternate submitting on July 2, 2026, that buyers have dedicated over 19 billion yuan ($2.8 billion) to Kling AI at a $15 billion pre-money valuation, with the spherical capped at 20.45 billion yuan, or roughly $3 billion, as soon as remaining buyers be part of. 

That places the deal’s post-money valuation at roughly $18 billion, in line with a Reuters report confirming the spherical has successfully closed with 38 buyers, together with Tencent, Alibaba Cloud, Baidu, CITIC Securities and Industrial and Industrial Financial institution of China. The elevate dilutes Kuaishou’s stake in Kling AI from 100% to about 68%.

Why buyers are paying up

Kuaishou spun Kling AI out of its short-video platform, one in every of China’s largest, turning an inner analysis venture right into a standalone AI video enterprise inside roughly two years. The startup, based inside Kuaishou and now working as a semi-independent unit, works by producing video from textual content prompts and pictures, placing it in direct competitors with OpenAI’s Sora, Runway and Google’s Veo.

In contrast to many AI video challengers nonetheless burning money on demo reels, Kling AI has business numbers to level to. Its 650 million yuan ($96 million) in first-quarter income was greater than quadruple the year-earlier determine, and its annualised run charge reached roughly $500 million in March, up from $300 million in January. 

That mixture of progress and built-in distribution via Kuaishou’s platform is what pulled in strategic patrons somewhat than pure monetary ones. 

Tencent, notably, is investing $200 million regardless of proudly owning Hunyuan, a rival video mannequin, an indication of how a lot conviction has shifted towards business traction over mannequin pedigree.

A widening hole with the West

The aggressive backdrop has moved quick in Kling AI’s favour. Sora’s shutdown and Runway’s pivot towards robotics and gaming have opened area in business AI video that each Kling AI and startups like Higgsfield are racing to fill. Higgsfield is chasing that opening via enterprise advert and content material budgets; Kling AI’s edge is a distribution community none of its Western rivals can replicate inside China.

The elevate additionally lands alongside reviews that Kuaishou plans to begin a Hong Kong itemizing course of for Kling AI inside twelve months, with proceeds earmarked for compute and knowledge centre buildout. 

The worldwide AI video generator market was valued at roughly $788.5 million in 2025 and is projected to succeed in $3.4 billion by 2033, a 20.3% compound annual progress charge, in line with Grand View Research.

Whether or not Kling AI’s income retains compounding as soon as the novelty wears off, or whether or not it will definitely runs into the identical value curve that sank Sora’s shopper play, is the query this spherical doesn’t reply. What it does affirm is that China’s largest platforms would somewhat personal a bit of that reply than watch it play out from the sidelines.