Baidu Inc. (NASDAQ: BIDU) experienced a notable uptick in its stock price on Tuesday as it achieved a significant milestone in the integration and growth of its artificial intelligence (AI) technology, while simultaneously advancing strategic plans to enhance the value of its semiconductor business. These developments underscore Baidu's increasing footprint in the AI market and its intention to capitalize on emerging opportunities within the chip manufacturing sector.
Central to this progress is Baidu's Ernie Assistant, an AI-powered digital assistant which has now surpassed 200 million monthly active users. This user base milestone marks a pivotal point in the company's AI adoption, reflecting broadening acceptance and application among consumers.
Baidu has embedded the Ernie AI assistant deeply into its fundamental search application, which remains a core service for the firm's user engagement. Additionally, the assistant is linked with Baidu's personal computer systems and has been integrated with several prominent platforms in China such as JD.com Inc. (NASDAQ: JD), Meituan (OTC: MPNGY), and Trip.com Group Limited (NASDAQ: TCOM). These integrations enable users to seamlessly perform a range of tasks including booking flights, ordering food delivery, and seeking specialized health or legal information through AI-assisted interactions.
Further enhancing its capabilities, Baidu’s Ernie Assistant offers an array of advanced features that cater to diverse user needs. Users can create images and generate videos, produce concise summaries, and choose from various AI models including DeepSeek and Baidu’s proprietary Ernie model. This multifunctional approach was detailed in a recent Wall Street Journal report.
Moreover, Baidu connects the AI assistant with its own maps and health services, thereby expanding the ecosystem in which AI is applied. The company's commitment to integrating AI across essential services reflects a strategic emphasis on maintaining competitive positioning within the broader Chinese technology landscape, particularly in light of intensifying AI investments undertaken by competitors such as ByteDance, Alibaba Group Holding Limited (NYSE: BABA), and Tencent Holdings Ltd. (OTC: TCEHY).
Alongside these AI adoption achievements, Baidu is making a significant corporate move aimed at unlocking the intrinsic worth of its chip manufacturing subsidiary, Kunlunxin. The company is in the process of preparing an initial public offering (IPO) in Hong Kong for Kunlunxin, which focuses on the development and production of AI chips.
Kulunxin’s IPO preparations have seen Baidu enlist several prominent investment banks to manage the listing process, with the offering potentially raising as much as $2 billion, though the exact size remains subject to final decisions. This strategic spinoff is intended to highlight and emphasize Kunlunxin's distinct position in the AI chip market, facilitate new financing avenues, and drive improved operational transparency.
Despite transitioning Kunlunxin to a publicly traded entity, Baidu plans to retain majority ownership, ensuring continued influence and control over the unit. Market analysts have characterized this maneuver as both a strategic pivot and a necessary adaptation to broader geopolitical and trade factors, notably China's objective to develop domestic alternatives to technology from international firms such as Nvidia Corp. (NASDAQ: NVDA), especially given the constraints on chip exports in place.
Looking ahead, experts expect Kunlunxin’s chips to assume an increasingly prominent role within data centers and telecommunications networks. Financial projections from JPMorgan, for instance, anticipate that Baidu’s revenue from chip sales may increase sixfold by 2026. Furthermore, the valuation of Kunlunxin as an independent entity is forecasted to represent a substantial segment within the artificial intelligence hardware market.
Reflecting market response to these developments, Baidu’s stock price closed Tuesday up 3.38% at $154.74, as reported by Benzinga Pro data. This rise suggests positive investor sentiment surrounding both the progressing AI adoption case via Ernie and the forthcoming IPO of its chip subsidiary.