On November 20, Nomura issued a research report, elevating Baidu’s U.S. stock rating to “Buy” and increasing its target price from $135 to $140. The report highlights that Baidu’s chip - design subsidiary, Kunlunxin, holds significant growth potential and can be considered a top - tier chip designer in China.

In the context of difficulties in overseas procurement of advanced chips, companies such as Kunlunxin and Alibaba’s T - Head are anticipated to capitalize on the robust growth in AI demand. Baidu revealed for the first time that its subscription revenue for AI high - performance computing facilities in the third quarter saw a year - on - year increase of 128%.

Nomura forecasts that Kunlunxin’s revenue will amount to RMB 2.6 billion and RMB 5.4 billion in fiscal years 2025 and 2026, respectively. This is roughly equivalent to 45% of the projected revenue of Cambricon, a leading AI chip company in mainland China, during the same time frame. It also projects that Kunlunxin’s standalone valuation could reach $23 billion.

However, Nomura also points out that Baidu’s advertising business is still sluggish. Although steps like introducing digital humans and agents have been taken to diversify revenue streams, these efforts are not yet enough to turn around the declining business trend.