👋 Hey Tigers!
The $Baidu(BIDU)$ 4Q earnings preview is hot off the press!
Is the "AI All-Star" finally ready to sprint? 🏃
The Tiger Research Team has updated its model, and the verdict is in: 👉 Maintain BUY rating 👉 Price Target RAISED to $150 (previously $135) 📈
The big driver? A hidden gem is getting ready to shine!
💎 Baidu is advancing the IPO of its AI chip subsidiary, Kunlunxin, which could be key to unlocking shareholder value. Is this the catalyst we've been waiting for?
We’ve broken down the IPO Valuation, the SOTP Model, and the Financials below.
Let's dive in! 👇
1. The Core Catalyst: Kunlunxin IPO 🚀
The Tiger Research Team believes the story right now is less about ad revenue and more about AI optionality.
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The IPO Plan: Baidu has confidentially filed for a Hong Kong IPO for Kunlunxin, its AI chip subsidiary. Baidu currently holds ~59-60% and intends to retain majority control post-IPO.
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Unlocking Value: Strategically, this provides independent access to capital for chip development while revealing "hidden value" to BIDU shareholders.
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Valuation Model assigns a valuation of RMB 100bn to Kunlunxin.
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This implies 15.4x 2026E EV/sales, which the team views as conservative compared to peers like Cambricon (trading at ~31.5x).
2. Financials: A Modest Trim
While the long-term story is exciting, the near-term numbers are being refined.
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Revenue: 4Q revenue estimates remain unchanged.
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Margins: They are modestly trimming 4Q Non-GAAP EBIT and EBITDA estimates to reflect refined assumptions around D&A (Depreciation & Amortization) and SBC (Stock-Based Compensation).
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The Cloud: They believe Baidu Cloud is well-positioned to benefit from accelerated AI adoption across China.
3. Valuation: The Sum-of-the-Parts (SOTP) 🧮
Our new $150 Price Target is derived from a comprehensive Sum-of-the-Parts analysis. Here is how the Tiger Research Team breaks down the empire:
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Online Marketing: Valued at $22B (6.8x '26 EBITDA).
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Baidu Cloud: Valued at $12B (2.8x '26E sales).
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Kunlunxin (AI Chips): Valued at $8.4B (15.4x '26E sales).
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Apollo (Robotaxi): Valued at $5B.
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Investments: ~$5.9B (including Trip.com shares).
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Adjustments: Plus Net Cash of $5B, applied with a 15% holding company discount.
4. Key Risks to Watch ⚠️
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Competition: Intense rivalry from giants like Alibaba, Tencent, ByteDance, and Huawei in ads and cloud.
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Regulatory: Ongoing risks related to data security rules and the status of foreign-listed companies (HFCAA).
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Execution: Any safety accidents in the autonomous driving sector could delay monetization of the Apollo unit.
📝 Summary
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Tiger Research maintains a BUY rating, viewing the stock as increasingly driven by its longer-term AI optionality rather than just near-term ad trends.
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The Kunlunxin IPO is a tangible step toward unlocking this value, while the Robotaxi business remains a potential candidate for a future valuation rating.
🐯 Questions for Tigers
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IPO Hype: Do you think the Kunlunxin spin-off will trigger a major rally for BIDU, or is it already priced in?
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Robotaxi Future: Are you bullish on Apollo's ability to monetize autonomous driving in 2026?
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Valuation: With a PT of $150, do you see $Baidu(BIDU)$ as a value trap or a value play right now?
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