After consecutive losses, Kunlun Wanwei has fallen into an AI mid-tier predicament.

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Author | Huang Yu

Kunlun Wanwei, a mid-sized internet company "All in AGI and AIGC," has been caught in a whirlpool of losses since 2024. When it will turn a profit has become the most important concern for investors in Kunlun Wanwei.

On May 11, during Kunlun Wanwei's online performance briefing, the management team did not directly answer repeated investor inquiries about when the company will achieve positive profitability, only stating, "The company continues to focus on its main business operations, striving to improve operational quality and profitability."

Obviously, Kunlun Wanwei's performance in recent years has failed to satisfy investors. The financial report shows that in 2025 Kunlun Wanwei's net loss attributable to shareholders reached as high as 1.593 billion yuan, and net cash flow from operating activities turned negative, plummeting 354.09% year-on-year to minus 736 million yuan.

The loss trend continued into the first quarter of 2026, with Kunlun Wanwei posting a single quarter net loss attributable to shareholders of 887 million yuan, a year-on-year increase in the scale of loss by 15.34%.

In terms of revenue, Kunlun Wanwei performed quite well. In the first quarter, with rapid development in short drama and AI short drama platform business, Opera advertising business, and AI business, revenue grew 45.69% year-on-year to 2.57 billion yuan.

Management revealed at the meeting that as of the end of March 2026, its short drama and AI short drama platform had achieved monthly turnover exceeding USD 48 million, and ARR (annual recurring revenue) surpassed USD 570 million.

But all the money earned was devoured by the enormous costs of AI R&D and traffic acquisition.

Faced with investor doubts about the high expenses for short drama promotion, management explained at the meeting that high promotion spending at this stage is a temporary investment to capture market share. They stressed that the overseas short drama and AI short drama industry are in a period of rapid expansion, and the long-term value of users is significantly higher than the cost of acquiring them, so the subsequent rate will gradually normalize.

This "burning money for market share" logic is a microcosm of Kunlun Wanwei's "All in AGI" strategy.

Strategically, Kunlun Wanwei seeks to build a full industry chain AI closed loop covering "computing power, models, and applications." The company has constructed a "4+3" entertainment economy structure, with video, music, world, and foundation large models at the base, empowering short drama, music, and games.

This wide net approach is completely different from the path of start-ups focused on single vertical tracks. Compared with agile AI newcomers who achieve breakthroughs in single domains, Kunlun Wanwei advances simultaneously in multiple tracks such as AI video, AI music, and AI social, resulting in greatly diluted resources and energy.

When facing suppression from industry giants, mid-sized Kunlun Wanwei lacks huge reserves of data and computing power. The company must maintain high R&D investment upstream to catch up with top-tier players, and pay huge marketing fees downstream to resist encroachment, ultimately falling into an awkward "mid-tier dilemma."

In pursuit of autonomous basic computing, Kunlun Wanwei's core chip platform, Aijieke Xin, completed a new round of funding of 550 million yuan in April 2026, with its post-investment valuation exceeding 4 billion yuan.

However, in response to investors' core concerns about when the chips will be mass produced and whether tape-out is successful, management responded evasively during the communication meeting, saying only "R&D is progressing smoothly" and other compliance phrases.

The vision for technology ultimately has to return to the fundamental logic of business. The overall explosion of the overseas short drama market has granted Kunlun Wanwei a brief dividend period, but to truly transform into an "AGI giant," 2026 will be a key year for it to adjust its strategy and prove its blood-making ability.

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