Kuaishou Technology is leveraging its AI model Kling to tap into a new SaaS market worth hundreds of millions of dollars while simultaneously using AI algorithms to unlock deeper value in its core ad inventory.

While the market debates whether large AI models are "money pits" or "valuation bubbles," Kuaishou has demonstrated how AI can transform from a cost center into a profit driver.

On November 27, Goldman Sachs released a research report following in-depth discussions with Kuaishou’s CFO and investor relations team, highlighting AI’s tangible impact on the company’s traffic, advertising, and e-commerce efficiency:

- The video-generation model **Kling** is rapidly evolving into a B2B productivity tool with annual revenue potential in the hundreds of millions of dollars. - AI algorithms have already contributed a **4-5%** boost to core ad revenue.

**Kling AI: From "Novelty Tool" to "Productivity Engine"** As Kuaishou’s flagship AIGC application, Kling AI is transitioning from user acquisition to monetization. Goldman Sachs projects that Kling’s Q4 2025 revenue will exceed **$45 million**, with annual revenue potentially reaching **$343 million** by 2027.

This growth is underpinned by a shift in user demographics. Management revealed that Kling is now positioned as a **professional content creation tool**, with B2B users increasing from 30% in Q2 to 40% in Q3 2025.

Kling has already onboarded **10,000 B2B clients** via API contracts, including platforms like Freepik, ad agencies, and gaming studios. Compared to consumer users, B2B clients exhibit higher retention and spending power, fueling a steeper growth trajectory.

Meanwhile, cost efficiency is improving. The latest **Kling 2.5 Turbo** model maintains high performance while significantly reducing video-generation costs. Despite price cuts to expand its user base, increased usage frequency has stabilized ARPU (average revenue per user) at **$20-30/month** for professional users.

Goldman Sachs notes that with **200 million professional video creators globally**, Kling’s low single-digit penetration rate suggests vast untapped potential.

**AI Reshapes Core Business: The Invisible "Efficiency Revolution"** If Kling represents Kuaishou’s "second growth curve," AI’s impact on its core operations is a stealthier but lucrative "foundational dividend."

Goldman Sachs reports that Kuaishou has deployed its AI-powered recommendation system **OneRec** across **25-30% of traffic distribution**, driving a **1%+ lift** in video views and user engagement—a meaningful gain given its massive daily active user base.

In advertising, A/B testing confirms that OneRec contributed **4-5% incremental growth** in Q3 2025. Additionally, **OneSearch** has enhanced GMV conversion in e-commerce.

Management acknowledges that while AI’s direct monetization in consumer-facing scenarios remains limited (users still prefer human-created content for authenticity), it has become the **core engine for ROI improvement** in traffic matching and ad delivery.

**Legacy Metrics Still Offer Room for Growth** Beyond AI-driven efficiency, Kuaishou has significant upside in traditional KPIs.

Its **ad load rate** (currently ~9%) lags behind Douyin’s (~14-15%). Management aims to push this above 9% by improving native ad quality through AIGC and refining algorithms. High-demand verticals like short dramas, novels, mini-games, and local services are fueling ad growth.

In e-commerce, Kuaishou is addressing its "shelf-based" gap, which accounts for **30% of GMV**, with plans to exceed 40% by enhancing live-stream links, bestseller rankings, and standardized product supply—building a more stable growth model beyond live commerce.