Baidu Inc. (BIDU) Stock Surges 6.69% on Kunlunxin Spin-Off Amid AI Restructuring Optimism

Baidu Inc. (BIDU) reached its highest level so far this month, surging 6.69% intraday as investors reacted to strategic shifts and valuation debates. The rally, part of a broader 7.79% gain over two trading days, reflects renewed optimism around the company’s AI-driven transformation and operational restructuring.

The stock’s performance follows Baidu’s decision to spin off its AI chip subsidiary, Kunlunxin, a move aimed at streamlining operations and focusing on core growth areas. Analysts view the restructuring as a bid to unlock value by allowing Kunlunxin to pursue independent partnerships and funding in the high-growth AI hardware sector. The spin-off could alleviate capital pressures for Baidu while positioning Kunlunxin to compete in a market dominated by global players like NVIDIA and AMD.

However, skepticism remains about whether the current valuation aligns with the company’s financial realities, particularly as its core search engine business still drives most of its revenue.

Baidu’s 85% stock rally over the past year has drawn scrutiny, with critics arguing the gains outpace tangible earnings growth. While the company’s investments in generative AI, large language models, and autonomous driving have bolstered its market profile, profitability remains tied to traditional advertising. The spin-off’s success hinges on Kunlunxin’s ability to scale independently and attract investment, a challenge given the competitive landscape. Meanwhile, macroeconomic factors, including China’s push for tech self-reliance and evolving regulatory scrutiny, add layers of uncertainty. Investors will closely watch how Baidu navigates these dynamics to determine if its recent gains reflect sustainable growth or speculative momentum.