Multiple institutions such as Damo and UBS are optimistic about Kuaishou (01024) AI and game growth: model upgrades and new game performance are potential catalysts

The Zhitong Finance App learned that after Kuaishou (01024) released its results for the second quarter of 2026, UBS, Bank of America Securities and Morgan Stanley released research reports one after another. The agency believes that although the core business is still affected by the macro environment and industry factors in the short term, the acceleration of commercialization of Keling AI, steady free cash flow, and good performance after the launch of new games are providing new growth support for the company.

Keling AI has become a common focus of attention for many organizations. In the second quarter, Keling AI's revenue exceeded 850 million yuan, an increase of more than 200% over the previous year. UBS pointed out that Keling's enterprise API service and professional user subscription business have maintained steady growth, paying users continue to expand, and ARPPU is relatively stable. The agency believes that Keling's next model upgrade is expected to further improve command understanding, multi-modality, image quality, agent and skit generation capabilities, and become an important catalyst for subsequent ARR growth and valuation improvement. In addition to the core business, there has also been a new increase in the Kuaishou game business.

Morgan Stanley pointed out that since the launch of the new Kuaishou game “Master of Secrets” on August 21, it has continued to rank 15th to 20th on the iOS bestseller list. If current performance continues, the game's annualized turnover may reach about 2 billion yuan and contribute high incremental profits. Since Kuaishou's previous performance guidelines did not include this game's contribution, it may bring room for improvement in the third quarter and full year results.

While AI and games are bringing new room for growth, Kuaishou's community ecosystem continues to deepen into more vertical and segmented interest groups. From August 29 to 30, the 2026 Kuaishou Photosynthetic Creators Conference will be held in Wuhan. The platform will focus on showcasing the ecological progress of the past year in terms of creators' growth, interest group building, and short and direct cycle system construction. As the foundation of Kuaishou's content and commercial ecosystem, the continuous active supply of communities and creators also provides the soil for the implementation of the platform's new technologies, products and business scenarios. While continuing to invest in AI, Kuaishou still emphasizes cash flow discipline and shareholder returns.

UBS pointed out that Kuaishou has completed AI capital expenditure of 17 billion to 18 billion yuan in the first half of 2026, and capital expenditure intensity is expected to decline somewhat in the second half of the year. The company plans to maintain a slightly positive balance of free cash flow throughout the year, and further enhance cash flow flexibility through computing power leasing in the future. Bank of America Securities mentioned that Kuaishou completed most of its annual capital expenditure in the first half of the year, and plans to maintain positive free cash flow in the second half of the year. Furthermore, since the beginning of the year, the company has spent a total of about HK$5 billion on share repurchases and dividends, which corresponds to a shareholder return of about 3%.

In terms of valuation, UBS believes that Kuaishou's current market value is close to 40% compared to the segmented total valuation, maintaining a “buy” rating and a target price of HK$60; Bank of America Securities also maintains a “buy” rating, with a target price of HK$53, which corresponds to a 40% increase in the stock price when the research report was published. Agencies generally believe that as pressure on core business gradually eases, commercialization of Keling AI accelerates, and the release of new businesses such as games increases, Kuaishou's subsequent valuation repair is expected to receive more support.