KUAISHOU "Investor Day": The focus is on AI

At the KUAISHOU Creator Conference held on August 29, AI business became the focus of attention.

According to news from the Chasing Wind Trading Desk, Morgan Stanley analyst Yang Liu and others stated in their latest research report that during the recent Investor Day event, KUAISHOU clearly conveyed a message to the market: the company's future narrative, growth engine, and valuation imagination are all fully leaning towards AI.

According to KUAISHOU's management, since the launch of the Keling 2.0 version in April, its monthly paid revenue has stabilized at over 100 million yuan, with overseas users contributing 70% of the revenue. This achievement directly prompted the company to raise its capital expenditure expectations, demonstrating management's firm commitment to the AI video generation field.

According to the report citing management's comments, model capability remains a key area of differentiation, which will continue to be a focus of the company's investment. The global video production market has an annual scale of 140 billion USD, and management expects AI to cover 20%-30% of this market share, with the potential to reach 50% in the long term.

Rapid Development of Keling Business Drives Capital Expenditure Growth

The rapid development of Keling has become the main reason for KUAISHOU's upward revision of capital expenditure guidance. The company has raised its 2025 capital expenditure expectation from 10 billion yuan to 12 billion yuan, with capital expenditure for Keling doubling.

Management pointed out that a large number of new entrants have emerged in the AI video generation field, and the overall technology is far from mature. KUAISHOU's competitive advantage lies in its model and product innovation capabilities, with Keling gaining widespread recognition for video authenticity, consistency, and motion performance. In the long term, video personalization will be an important direction for improvement, and Keling hopes users can take on a director's role, experiencing a virtual studio while using the product.

The report noted that the company is also developing workflow integration and end-to-end solutions to enhance user stickiness. Management believes that due to the performance gap in models and the huge investment in infrastructure, low-price strategies have limited effectiveness in attracting users. KUAISHOU may adopt a more aggressive approach in model iteration and pricing to compete for customers in the future.

AI Empowering Core Business

KUAISHOU launched a new generation of AI-based end-to-end recommendation model OneRec in the first half of 2025, with 25% of traffic currently running on this new system. Management observed significant improvements: total usage time increased by 1%, local service search click-through rate increased by 5%, and e-commerce search GMV increased by 4.5%.

In terms of advertising recommendations, when using AI to understand ad content, internal A/B testing at KUAISHOU showed an 8 percentage point improvement in recommendation effectiveness. By linking user behavior with AI models, customer complaint rates decreased by 20%. The cost of OneRec is also much lower than the previous funnel-based recommendation model.

Management believes that using AI technology to improve advertising recommendations is relatively easy, while simulating others' responses in the advertising bidding system is relatively difficult, so there is no rush to aggressively monetize OneRec. OneRec is still in the iteration stage, and management expects it to soon carry 50%-60% of the traffic.

Core Business Steady: E-commerce and Advertising Remain Cornerstones

In the competition of the short video industry, KUAISHOU-W is relatively strong among the younger generation and elderly user groups, especially in specific categories such as agriculture, performances, and young celebrities. The company believes that direct competition is not intense, and the proportion of sales and marketing expenses to revenue is expected to decline.

The advertising business continues to grow strongly in areas such as short dramas, games, education, and local services, despite food delivery platforms cutting advertising budgets. In terms of e-commerce operations, KUAISHOU-W cleverly utilizes subsidies and commission incentives, and shelf e-commerce will continue to grow rapidly.

Management emphasizes that KUAISHOU-W's advantage lies in the relevance of content and products. In terms of monetization, the commission rate has doubled in the past year, although the base is relatively low. As GMV remains smaller compared to other platforms, the company is willing to subsidize merchants with part of the traffic, allowing time for merchants to enhance their capabilities. Internally, KUAISHOU-W hopes to integrate the shelf e-commerce and live e-commerce advertising platform systems, which may bring future growth opportunities.

Additionally, the report notes that the company is continuously optimizing its technical infrastructure. Through the new data center cluster in Ulanqab and a new internal resource management platform, KUAISHOU-W has been able to continuously reduce the proportion of data center and bandwidth costs in revenue without affecting user experience