Baidu Stock Hits 52-Week High on AI Chip Unit's IPO Plans
Shares surged over 15% after the company confirmed its AI chip division, Kunlunxin, has filed for a Hong Kong IPO, a move analysts believe will unlock significant value.
Shares of Chinese technology giant Baidu Inc. surged to a new 52-week high on Tuesday, as investors cheered the company's move to spin off its fast-growing artificial intelligence chip unit.
Baidu's American depositary receipts (ADRs) jumped more than 15% in afternoon trading to over $150, after the company confirmed its AI semiconductor division, Kunlunxin, has confidentially filed for an initial public offering on the Hong Kong Stock Exchange. The broader market enthusiasm for the strategic move has propelled the stock up over 20% in the past week, pushing its market capitalization above $52 billion.
The filing represents a significant step in Baidu's strategy to unlock the value of its substantial investments in AI and to sharpen its focus on its core internet search and cloud computing businesses. According to a report from the South China Morning Post, Baidu will remain the controlling shareholder of Kunlunxin post-listing, holding a 59.45% stake.
Wall Street analysts responded with immediate optimism, viewing the spin-off as a key catalyst for crystallizing the chip unit's standalone value. Analysts at Jefferies raised their price target on Baidu to $181, estimating that a successful IPO could value Kunlunxin at between $16 billion and $23 billion. The bank’s valuation model suggests the chip division alone could contribute $9 to $13 billion to Baidu's overall worth.
This sentiment was echoed by Nomura, which took an even more bullish stance. The firm reportedly increased its price target on Baidu's U.S. stock to $178, based on a potential valuation for Kunlunxin as high as $32 billion. The IPO is widely expected to be completed in the first half of 2026.
Kunlunxin develops AI accelerators that are crucial for deep learning and high-performance computing tasks, placing it at the center of China’s broader push for technological self-reliance in the critical semiconductor sector. These chips are not only used internally to power Baidu's own services but are also sold to external clients in areas like finance and manufacturing. An independent listing is expected to provide Kunlunxin with the dedicated capital required to expand its research and development and compete more effectively in the global AI chip market, which is currently dominated by players like Nvidia.
For Baidu, the IPO serves to highlight the value of its diverse portfolio and could set a precedent for how Chinese tech conglomerates can surface value from their various high-growth subsidiaries. By separating the capital-intensive chip design business, Baidu can present a clearer picture of its profitable core advertising and enterprise cloud segments to investors. At its current price, Baidu trades at approximately 13.5 times its trailing earnings, a valuation that analysts believe could see significant expansion as the market begins to properly price its AI-driven growth engines like Kunlunxin and its autonomous driving division, Apollo.