Baidu’s Kunlunxin Chip Spinoff Plan Could Be A Game Changer For Baidu (BIDU)

• Baidu recently confirmed it is exploring a spinoff and potential Hong Kong IPO of its AI chip unit Kunlunxin, which is being evaluated for a valuation of about US$3.00 billion and could file an application as early as the first quarter of 2026, subject to regulatory approvals and final board decisions.
• This move highlights Baidu's effort to surface the standalone value of its in-house AI semiconductor capabilities, potentially sharpening capital allocation between its core search, cloud, and autonomous driving businesses and a separately funded chip platform.
• We’ll now examine how the potential Kunlunxin spinoff and listing may reshape Baidu’s AI-focused investment narrative and future earnings mix.

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Baidu Investment Narrative Recap

Baidu’s investment case still rests on its ability to turn its AI stack ERNIE, cloud, and Apollo Go into profitable, scalable businesses while stabilizing a pressured core ad business. The Kunlunxin spinoff plan could become a short term catalyst by crystallizing chip asset value and easing capital needs, but it does little to offset near term risks around weak online marketing trends and margin pressure from heavy AI spending.

In this context, Baidu’s recent launch of ERNIE 5.0 and broader Baidu World 2025 upgrades looks directly connected to the Kunlunxin story, since both deepen Baidu’s positioning as a full stack AI infrastructure provider. If Kunlunxin raises external capital while ERNIE driven services and Apollo Go continue to scale, that combination could shift Baidu’s earnings mix further away from volatile advertising and toward subscription and service based AI revenue.

Yet, despite the excitement around AI chips and models, investors should also be aware that...

Read the full narrative on Baidu (it's free!)

Baidu's narrative projects CN¥150.8 billion revenue and CN¥22.3 billion earnings by 2028. This requires 4.0% yearly revenue growth and an earnings decrease of CN¥3.1 billion from CN¥25.4 billion today.

Uncover how Baidu's forecasts yield a $151.62 fair value, a 21% upside to its current price.

Exploring Other Perspectives

Fourteen members of the Simply Wall St Community currently see Baidu’s fair value anywhere between US$71.17 and US$151.62, with estimates spread across the full range. Against that backdrop, the key open question is whether Baidu can overcome ongoing delays in AI search monetization and margin pressure from AI investments, which could materially shape how those different views on the company’s future play out.

Explore 14 other fair value estimates on Baidu - why the stock might be worth 43% less than the current price!

Build Your Own Baidu Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Baidu research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.
• Our free Baidu research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Baidu's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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