Keling AI goes viral overseas for the New Year; JPMorgan: We reiterate that Kuaishou is one of the world's cheapest AI stocks.

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Keling AI experienced explosive growth during the 2026 New Year period, driving Kuaishou’s Hong Kong stock price to rise for two consecutive trading days, with an increase of more than 11% on Monday.

According to information from Chasewind Trading Desk, on January 5th, JPMorgan’s securities research team led by Chen Qi released a research report, stating that Kuaishou not only remains solid in its core short video business, but also holds a leading position in the key sector of generative AI.

Due to “pet dancing” videos going viral in overseas markets during the New Year, Keling AI’s revenue soared. According to Sensor Tower data, in January 2026, Keling AI’s average daily revenue on mobile platforms increased by 102% compared to December 2025, with revenue in the Korean market surging 13-fold.

Keling AI’s strong performance demonstrates the huge potential of the AI video generation market, while Kuaishou’s massive daily active user base of 416 million provides a solid foundation for its advertising business.

Analysts reiterated their optimistic stance on Kuaishou, maintaining an “overweight” rating. The report highlights that Kuaishou’s current valuation corresponds to 12 times 2026 expected price-to-earnings ratio, and the expected compound profit growth rate for 2026-2027 is 21%, making it one of the most undervalued AI stocks globally.

“Pet Dancing” Videos Spark Overseas Market, Keling AI Revenue Soars

Keling AI’s explosive performance during the 2026 New Year stems from the release of its version 2.6 motion control feature.

This innovative feature allows users to create AI-generated videos in just one minute, based on their own photos and original motion videos (such as dance or expressions).

(Keling AI’s ‘Pet Dancing’ AI Video)

Creative videos like “puppy dancing” quickly went viral across social networks, propelling Keling AI to become the most downloaded app in four countries including Korea and Turkey, and to be ranked among the top ten in ten countries.

In terms of geographic revenue distribution, in the past 90 days, 31% of Keling AI’s revenue came from the US, 9% from the UK, 6% from Korea, and 4% from Russia and Japan. In downloads, 52% came from India, 8% from the US, and 6% from Korea.

It is worth noting that although mobile platform revenue growth is remarkable, JPMorgan pointed out that most of Keling AI’s revenue still comes from enterprise and professional consumers on the PC platform, so the actual revenue increase in Q1 2026 will not be as extreme as shown by the mobile platform data.

JPMorgan expects that, supported by product updates and enterprise spending (which accounts for 40% of total revenue), Keling’s Q4 2025 revenue will grow quarter-over-quarter. For the whole of 2026, analysts forecast Keling’s revenue to grow by 62% year-on-year, reaching 1.7 billion yuan.

This optimistic outlook is based on the huge potential in the global AI video generation market—JPMorgan estimates the market size at $140 billion, with the short-term AI penetration rate expected to reach 20-30%.

Keling is also set to hold a press conference at the Consumer Electronics Show (CES) on January 7, 2026, which is expected to further boost brand influence.

AI Empowers Advertising Business, Becoming Core Growth Driver for 2026

Apart from Keling AI’s direct revenue contribution, the transformation of Kuaishou’s core business with AI technology is also noteworthy.

Management disclosed that improvements in AI advertising technology had a positive impact of 4-5% on Q3 2025 advertising revenue, with more potential growth in 2026. JPMorgan believes that AI will be the main driver of Kuaishou’s advertising growth in 2026, reflected in three aspects:

First, major hyperscale cloud service providers’ AI services (such as chatbots and vertical AI apps) are rapidly increasing their customer acquisition budgets, and Kuaishou’s 416 million daily active users make it an ideal traffic portal;

Second, the rise of new entertainment formats such as AI-generated comics will create new monetization opportunities;

Third, continuous improvement in advertising technology itself will enhance monetization efficiency.

Although e-commerce advertising (about 50% of total advertising revenue) faces market growth slowdown, taxation, and competition uncertainties in 2026, external circulation ads (non e-commerce) are expected to maintain strong growth momentum.

Profit Margins Rise, Profitability Continues to Optimize

Kuaishou raised its 2025 capital expenditure guidance from 12 billion to 14 billion yuan, mainly for investment in Keling AI and advertising technology.

While increasing capital expenditure will put some short-term pressure on profit margins, JPMorgan estimates the impact on gross margin is about 1%, and AI-related costs (including R&D staff) will drag overall profit margin by 1-2%, but analysts remain optimistic about long-term margin improvement prospects.

JPMorgan predicts that Kuaishou’s adjusted net profit margin in 2026 will increase by 1.4 percentage points year-on-year. Adjusted net profit is expected to grow by 20% year-on-year in 2026, and will continue to grow by 23% in 2027. This profit forecast is 8% higher than market consensus.

JPMorgan believes Kuaishou’s growth potential and valuation advantage in the AI era make it a key investment target worth focusing on in 2026.

JPMorgan maintains an “overweight” rating for Kuaishou, with a target valuation based on 14 times 2026 expected price-earnings ratio. The firm forecasts Kuaishou’s profit will achieve a compound annual growth rate of 21% from 2026-2027. Notably, Kuaishou’s current share price corresponds to only 12 times the 2026 forward price-to-earnings ratio, and analysts believe it is one of the lowest valued stocks.

Analysts emphasize Kuaishou’s investment value in: Advertising and e-commerce businesses have not fully monetized, and their growth rate will exceed the entire advertising market (forecasting a 13% compound annual growth rate for ad and e-commerce commission income in 2026-2027); revenue structure tilted towards higher margin businesses will boost profit margins; Keling, as a leading AI video generation model, sees rapid revenue growth.

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The above highlights are from Chasewind Trading Desk.

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