Key Takeaways:
Macquarie raised Baidu's price target to HKD181, expecting the Kunlunxin IPO to unlock meaningful value.
"Baidu is increasingly differentiating itself from domestic internet peers by providing integrated AI solutions covering chips, cloud infrastructure, large language models and applications," Macquarie said in a note after conducting non-deal roadshows in the US and Canada.
The broker lifted its target for Hong Kong-listed shares to HKD181 from HKD169 and raised the US stock target to USD177 from USD166, maintaining an Outperform rating. AI-related businesses now contribute more than half of group revenue, Baidu management said during the roadshow. The rapidly growing infrastructure business is expected to gradually offset pressure from the traditional search business.
Macquarie assigned Kunlunxin a valuation of about USD48 billion, with revenue forecast to more than double year-over-year to about RMB8.5 billion in fiscal 2026. Baidu's 59% stake equates to USD82.5 per share in a sum-of-the-parts valuation. The IPO is expected to unlock meaningful value after listing.
The target raise signals Macquarie's conviction that Kunlunxin's listing will surface hidden value in Baidu's AI portfolio. Investors will watch for the IPO filing details and pricing range as the next catalyst.
This article is for informational purposes only and does not constitute investment advice.
