Goldman Sachs: Baidu (BIDU.US) Kunlunxin Spin-off and HK Listing Application Marks a Decisive Step to Unlock Value; Buy
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Goldman Sachs maintains its Buy rating on Baidu, setting a 12-month sum-of-the-parts target price of $155 for BIDU.US and HK$151 for 9888.HK following the announcement of Kunlunxin's spin-off and Hong Kong listing application.
Baidu announced on January 1, 2026, that Kunlunxin has submitted a listing application to the HKEX. Post-spin-off, Baidu expects to retain a controlling stake, currently at 59% as of August 2025. Goldman Sachs views this as a decisive step toward unlocking undervalued asset value. The firm estimates Kunlunxin's total sales at approximately RMB 3.5 billion for 2025, projected to reach RMB 6.5 billion in 2026 as external sales rapidly expand.
Valuing the unit against comparable companies like Cambricon and Moore Threads, analysts estimate Baidu's 59% equity stake could be worth $3 to $11 billion, representing 6% to 23% of Baidu's current market capitalization. Applying a 40x 2026 price-to-sales multiple, similar to current peer multiples, implies a $22 billion valuation, or 45% of Baidu's current market value.
Kunlunxin is a critical component of Baidu's full-stack AI cloud capabilities, integrating chips, deep learning frameworks, and cross-industry applications. Its P800 chip has already secured orders across internet, telecom, and financial sectors. Goldman Sachs left earnings forecasts unchanged pending further disclosures. Key catalysts include new order announcements, spin-off progress, and first-quarter 2026 shareholder return policy updates. Risks encompass AI cloud competition and potential downturns in search advertising impacting cash flow.