Jefferies sees further upside ahead for Baidu from a planned spin-off of its AI chip subsidiary. The bank maintained its buy rating on the Chinese internet search provider. Analyst Thomas Chong raised his price target to $181 price target from $159, signaling 39% upside from Wednesday’s close. The analyst pointed to Baidu’s proposed spin-off of Kunlunxin , its artificial intelligence chip subsidiary, as a tailwind for the company. Baidu plans to list it on the Hong Kong Stock Exchange. He believes that this proposed spin-off could unlock full Kunlunxin’s valuation. BIDU 1Y mountain BIDU 1Y chart “It aims to showcase KLX value, enhance market profile, broaden financing channels and management accountability with performance. In addition, it unlocks Baidu’s value in AI powered business,” he wrote. “Upon completion, KLX will remain as subsidiary to Baidu.” Benefits include increasing Kunlunxin’s operational and financial transparency and appealing to an investor base specialized in AI computing chips. Chong added that Kunlunxin’s listing status could enhance its profile and provide it independent access of both equity and debt capital markets. Chong also noted that Baidu recently unveiled two new Kunlun chips and super node solutions. Shares of Baidu have surged 58% over the last 12 months. Analysts generally like the Chinese tech giant. Of the 33 who cover the stock, 25 rate it a buy or strong by, according to LSEG.
