Why Baidu’s Quiet Spin-Off Could Unlock a Major Re-Rating

Core Viewpoint - Baidu's stock has risen approximately 15% recently, reclaiming the $148 price level, primarily due to a strategic move by management involving the spin-off of its AI chip subsidiary, Kunlunxin [3][4]. Company Developments - Baidu has confidentially filed for an initial public offering (IPO) of its AI chip subsidiary, Kunlunxin, on the Hong Kong Stock Exchange, signaling a shift in market perception from being solely an advertising platform to a diverse holding company with high-growth assets [4]. - The spin-off of Kunlunxin is expected to target a valuation of approximately $3 billion (RMB 21 billion), with Baidu retaining a controlling majority stake of about 59%, allowing shareholders to benefit from the chip unit's success while establishing its own market value [5]. Market Context - The spin-off comes at a time when stringent U.S. export controls have limited Chinese companies' access to advanced chips from American suppliers, creating a demand for high-performance alternatives within China [6]. - Baidu's new subsidiary is well-positioned to supply high-performance computing chips to a domestic market that is increasingly reliant on local suppliers due to supply chain concerns [7].