HSBC has raised its target price for Baidu while maintaining a Hold rating on the Chinese tech giant.

The target-price upgrade came after Baidu submitted a confidential listing application for its chip unit Kunlun Chip (KLX) to the Hong Kong Stock Exchange on 1 January 2026. The planned spin-off will still require regulatory approval.

According to Reuters, Kunlun Chip generated revenue of RMB 2 billion in 2024, with a net loss of RMB 200 million. The company plans to lift revenue to more than RMB 3.5 billion in 2025 and reach break-even. Based on a similar growth rate of over 70% in 2025, HSBC forecasts that Kunlun Chip’s 2026 revenue could reach around RMB 6 billion, with the split between direct hardware chip sales and chip-related cloud services estimated at roughly 1:3.

J.P. Morgan has upgraded Baidu’s stock rating to Overweight and sharply raised its target price to USD 188, citing the rising importance of cloud computing and artificial intelligence as Baidu’s key growth drivers. Although the online marketing business faces headwinds, Baidu’s AI product capabilities remain robust. These latest developments highlight the growing significance of Baidu’s AI and cloud businesses as core pillars of its future growth strategy.

Specifically, the spin-off is expected to unlock Kunlun Chip Group’s standalone value more fully. Investors will be able to assess and price Kunlun Chip’s performance and potential independently, based on its own strengths.

After listing, Kunlun Chip is likely to enhance its profile among customers, suppliers and potential partners, improving its ability to win new business and drive growth — benefits that should also accrue to Baidu as the controlling shareholder.

Market Commentary:

Kunlun Chip is Baidu’s in-house AI computing chip and integrated hardware–software systems supplier. It originated from Baidu’s Intelligent Chip and Architecture Department, with the company’s self-developed chip projects dating back as far as 2011. Baidu has stated that Kunlun Chip’s business is expected to attract a dedicated group of investors focused on general-purpose AI computing chips and related hardware–software system solutions.