On June 29th, sources told NUPIAO that Baidu Group (NASDAQ: BIDU/09888.HK) is seriously eyeing an IPO for its subsidiary, Kunlunxin (Beijing) Technology Co., Ltd. The target? A mind-blowing $50 billion valuation, which actually puts it 40% higher than Baidu’s current total market value! Investors are already starting to circle.
Here’s the kicker: insiders reveal that some investment firms wanting to get in on the action might need to buy into Kunlunxin’s chips first. We’re talking about purchasing power amounting to 3 to 7 times the value of the shares they want to subscribe for. On the customer front, Tencent has already signed up as a client, while ByteDance is reportedly weighing the option of adopting their AI chips.
However, when asked directly about this, sources close to the situation told NUPIAO via First Financial Daily that ByteDance currently has no intention of collaborating with Kunlunxin at this moment.
The technology is clearly ready. Kunlunxin’s P800 chip has passed large-scale verification. Since the start of 2025, they’ve delivered multiple clusters of 10,000 cards and successfully trained the critical Wenxin 5.1 version on fully domestic hardware clusters.
If this IPO goes through smoothly, it will stand out as one of the largest AI chip IPOs in China in recent years.
The market reacted instantly. Baidu’s HK stock price surged on the news, jumping over 8%. As of this writing, it’s trading at 105.8 HKD per share, up 7.14%, with a total market cap hovering around 288 billion HKD (roughly $35.8 billion).
Kunlunxin isn’t just looking at Hong Kong; they are pushing hard for a dual “A+H” listing. Back in May, the CSRC website confirmed that Kunlunxin officially started its辅导 (guidance/pre-IPO) process for the STAR Market on May 7th, with CICC serving as the guiding institution.
Baidu hasn’t issued an official public statement yet on this specific development. But remember, earlier this year, Baidu announced that Kunlunxin had submitted its application for listing to the Hong Kong Stock Exchange via its joint sponsors back on January 1st.
According to Tianyancha App data, Kunlunxin was founded way back in June 2011. It has a registered capital exceeding 400 million RMB, with Ouyang Jian as the legal representative. The big boss here is Baidu (China) Limited, holding a 57.667% stake. Their business covers everything from IC design to sales. Right now, their order book is packed with demand from Baidu itself, China Mobile, Geely, State Grid Southern Power, and China Merchants Bank.
It all started in 2011 when Baidu realized the rising compute costs for search, ads, and recommendations. They kicked off an internal FPGA AI accelerator project. By 2018, they unveiled their first self-developed AI chip, “Kunlun,” hitting mass production in 2020. In April 2021, Baidu spun off the intelligent chip business, making Kunlunxin independent and securing its first round of funding with a valuation of around 13 billion RMB. That same year, the second-generation series went into production.
With the wave of large models rolling in, Kunlunxin hit the fast lane. In 2024, the third-gen P800 chip hit the streets, and by 2025, they successfully built China’s first self-developed 32,000-card AI cluster. Fast forward to July 2025, Kunlunxin wrapped up its Series D financing, raising about $283 million. Post-money valuation hit 21 billion RMB, bringing in new investors like China Mobile Innovation & Creation, BYD, and Cinda Hong Kong. Just a month later, they landed a massive bid from China Mobile for 2025–2026 AI inference server procurement, a deal worth billions of RMB.
As Baidu’s in-house AI chip division, Kunlunxin’s revenue streams come from Baidu’s AI infrastructure, chip sales, and cloud services. However, Baidu’s financial reports don’t break down Kunlunxin’s numbers separately.
On May 18th, Baidu released its unaudited Q1 2026 financial report. Total revenue hit 32.08 billion RMB, a slight 2% dip quarter-on-quarter but still beating the general market expectation of 31.49 billion RMB. General business income came in at 26 billion RMB, up 2% YoY, surpassing expectations. iQiyi contributed over 6 billion RMB, though it dipped 8% compared to the previous quarter.
For Q1 2026, Baidu’s operating profit was 3.2 billion RMB, with an operating margin of 10%. Non-GAAP operating profit stood at 3.8 billion RMB, with a margin of 12%. Compared to the previous quarter, operating profit jumped from 1.5 billion to 3.2 billion RMB (up ~115%), and non-GAAP profit rose from 3 billion to 3.8 billion RMB (up ~28%). However, year-over-year, both metrics saw a decline, dropping from 4.5 billion and 5.3 billion RMB respectively to 3.2 billion and 3.8 billion RMB (down ~29%).
After adopting a new reporting structure, Baidu now splits its business into “AI-related” and “Traditional.” The AI bucket includes AI Infrastructure (AI Infra), AI Applications, and AI-native Marketing Services.
The results speak for themselves. AI-related business was the star of the show. Revenue reached 13.6 billion RMB, a massive 49% jump YoY, accounting for 52% of general business income—the first time it’s crossed the 50% threshold. This growth has been consistent for several quarters. Specifically, Baidu Smart Cloud (AI Infra) revenue soared 79% to 8.8 billion RMB. AI app revenue hit 2.5 billion RMB, and AI-native marketing services brought in 2.3 billion RMB. Meanwhile, traditional business income fell 29% YoY and 18% QoQ to 10.2 billion RMB.
This signals a clear shift: Baidu’s core revenue is moving away from traditional search ads toward AI infrastructure (Smart Cloud), AI applications, and AI-native marketing. Li Yanhong, Baidu’s co-founder and CEO, noted that the explosive growth in AI cloud is driven by the surge in enterprise demand for generative AI and foundation model training/inference. Baidu’s years-long build-up of full-stack AI capabilities provides solid support for this expansion. The Qianfan MaaS platform keeps cutting inference costs and boosting training efficiency, attracting countless enterprises to choose Baidu’s AI cloud services.
Industry analysts weigh in: 2026 is the pivotal year where AI transitions from tech exploration to large-scale commercialization. The fact that Baidu’s AI revenue now exceeds half of its general business income is a huge industry milestone. It proves AI can sustainably generate profits. Baidu’s “Chip-Cloud-Model-Entity” full-stack layout combined with agent deployment offers a replicable path for the entire sector.
Looking at the balance sheet as of March 31, 2026, Baidu’s cash and investments totaled a robust 279.3 billion RMB, showing ample liquidity. The company holds 29.9 billion RMB in cash and equivalents, 86.9 billion RMB in net short-term investments, and 116.4 billion RMB in long-term time deposits and held-to-maturity investments.
