More than two years after the AI large model wave began, AI application companies are finally seeing substantial returns on their investments, with profitability extending beyond just the "infrastructure providers."

KUAISHOU-W, listed for over four years, has prospered under AI's influence. As one of the two major short video giants to go public, KUAISHOU-W has decided to distribute its first dividend.

On August 21, Kuaishou Technology released its Q2 2025 earnings report and announced its first special dividend since listing, at HK$0.46 per share, totaling approximately HK$2 billion.

Behind Kuaishou's dividend lies its better-than-expected Q2 performance. The financial report shows Q2 revenue grew 13.1% year-over-year to RMB 35 billion, marking the highest revenue growth rate in five quarters. Adjusted net profit increased 20.1% year-over-year to RMB 5.6 billion, reaching a historical high. Additionally, Kuaishou's gross margin and adjusted net profit margin both hit historical peaks at 55.7% and 16% respectively.

AI became the biggest contributor to Kuaishou's outperforming results. During the earnings call, Kuaishou CFO Jin Bing stated that the company has been pleased to see AI's significant role in improving quality and efficiency internally, while AI's value in Kuaishou's content and commercial ecosystem is gradually being released, particularly Kling AI's rapid progress in commercial monetization.

According to the financial report, Kling AI, Kuaishou's flagship AI application and video generation platform, experienced rapid commercial growth with revenue exceeding RMB 250 million in Q2. Since its launch in June last year, Kling AI has maintained high-speed iteration, recently launching its 2.1 series model with significantly improved generation speed.

Data shows that as of July this year, Kling AI has cumulatively produced over 200 million videos and 400 million images, serving over 20,000 enterprise clients. It has formed a multi-platform product matrix including App, Web (Chinese and English versions), and Kuaishou mini-programs, becoming a comprehensive AI productivity engine.

Jin Bing revealed that Kling's projected full-year 2025 revenue is expected to double from initial targets, strengthening Kuaishou's determination for long-term investment in Kling AI. Based on business development needs, Kuaishou increased its investment in Kling AI's inference computing power mid-year, with related 2025 Capex expected to double compared to initial budgets.

Notably, Jin Bing pointed out that since Kling AI has achieved positive gross margins at the inference computing level, and while maintaining product iteration upgrades, Kling AI's inference-level gross margins remain relatively stable. Therefore, the additional inference computing investment's impact on group profits remains controllable.

Based on this positive performance, Jin Bing stated: "We expect the group's overall AI investment impact on full-year profit margins to remain around 1-2%, meaning despite increased AI investment, we remain confident in achieving our goal of maintaining stable year-over-year adjusted net profit margins for the full year."

Looking at medium to long-term development, Kuaishou believes Kling's unit training costs and inference cost curves still have room for further reduction. As AI continues to release value in empowering content and commercial ecosystems, the company believes incremental AI investment can bring sustainable performance growth opportunities.

Like many internet companies, Kuaishou is firmly advancing its AI strategy. Since 2023, Kuaishou has comprehensively launched its AI strategy, successively introducing Kuaiyi language large model, Ketu image generation large model, Kling video generation large model, OneRec end-to-end generative recommendation large model, and other large model matrices, along with AI business applications including Magnetic Force Creation, Nuwa Digital Human, Digital Employee π, and UAX fully automated placement, forming a complete artificial intelligence ecosystem layout.

While accelerating Kling AI iteration for commercial breakthroughs, Kuaishou is actively promoting deep integration of AI technology with existing businesses. In this context, Q2 total traffic reached new highs with average daily active users reaching 409 million, up 3.4% year-over-year, average monthly active users reaching 715 million, up 3.3% year-over-year, and total user engagement time up 7.5% year-over-year.

Online marketing services, Kuaishou's main revenue source, generated RMB 19.8 billion in Q2, up 12.8% year-over-year with growth rates improving from Q1, accounting for approximately 56.4% of total revenue.

In the financial report, Kuaishou specifically emphasized AI's boost to marketing services, including tapping incremental budgets across industries and leveraging AI large model technology to optimize intelligent marketing product solutions, achieving good progress in AIGC marketing material generation, marketing bidding, and marketing recommendations.

Kuaishou founder and CEO Cheng Yixiao stated: "In Q2 2025, our AI large model capabilities were applied across numerous platform ecosystem scenarios, not only improving operational efficiency for merchants and creators but also bringing more immersive creative experiences for content creators."

In this global AI arms race, Kuaishou has reached a critical juncture for value reassessment. JPMorgan Chase is very bullish on Kuaishou, recently publishing research stating: "Kuaishou remains the most undervalued AI stock." Against this backdrop, JPMorgan significantly raised Kuaishou's target price from HK$71 to HK$88, representing 22% upside, while reaffirming Kuaishou as the top pick in China's digital entertainment sector.

JPMorgan emphasized that Kuaishou is "not just about Kling (AI large model)," as its core advertising business acceleration and AI's boost to advertising are equally undervalued.

Huatai Securities analysts set Kuaishou's target price at HK$85.28, stating that the valuation upgrade is mainly due to Kling's potential to contribute more revenue growth in the future.

Capital markets are also very optimistic about Kuaishou. As of August 22 close, KUAISHOU-W's stock price was approximately HK$74.9, with cumulative gains of over 80% year-to-date.

Driven by AI, Kuaishou has found its new development rhythm, but to achieve a leading position in the future, it will inevitably need to overcome considerable challenges.