Mary Fowler also played the whole match in a goalfest at the Allianz Riviera in Nice.
The Matildas went behind in the first minute of the game, when striker Barbra Banda found the net.
However, Kennedy’s powerful header followed just six minutes later.
Our defender sprung the offside trap before directing the ball into the corner with her head.
They were only level for 14 minutes as Rachael Kundananji restored Zambia’s advantage.
Banda grabbed her second of the match in the 33rd minute, rolling home after capitalising on a loose ball.
Former City winger Hayley Raso gave Australia hope just two minutes later, heading home a corner.
That was short lived, with a scrambled finish completing Banda’s hat-trick just moments before the half-time whistle.
Kundananji opened up a three-goal lead for Zambia in the 56th minute before Michelle Heyman and two Steph Catley goals looked to have made it a point apiece.
Heyman had other ideas, completing the scoring with an incredible 11th goal in a truly unforgettable match.
It means the 2023 World Cup semi-finalists have three points from their two matches in France so far after losing 3-0 to Germany on Thursday.
Australia will qualify for the quarter-finals of this summer’s tournament if they beat USA in their final group game.
That would see them through in the group’s top two but defeat could still earn them one of the two best third placed teams across the three groups.
Elsewhere, Laia Aleixandri played the full match for Spain as they made it two wins from two with victory over Nigeria.
Our 23-year-old starred at the heart of the defence as Alexia Putellas’ late goal earned a 1-0 win for the world champions.
Earlier in the day, Yui Hasegawa had played the full match for Japan as they earned a dramatic late win over Brazil with two stoppage time strikes.
In the men’s competition, Julian Alvarez and Argentina are next in action on Tuesday when they play Ukraine at 16:00 (UK).
We’ll have roundups from every match at the Olympics involving City players on mancity.com and our official app.
