How much is Kunlun Core held by Baidu worth? Goldman Sachs: If compared to the valuation of Cambricon, it is equivalent to 45% of Baidu's market value

Goldman Sachs pointed out in its latest research report that Baidu's chip division, Kunlun Chip, has officially submitted its listing application to the Hong Kong Stock Exchange, marking a solid step for Baidu in unlocking asset value.

According to the Chasing Wind Trading Desk, on January 3rd, Goldman Sachs released its latest research report, stating that based on its core calculations, if the market assigns Kunlun Chip a valuation multiple similar to that of Cambricon (40 times sales), the 59% stake held by Baidu could be worth as much as $22 billion, astonishingly equivalent to 45% of Baidu's current total market value. Even under conservative valuation, this represents significant potential upside.

Kunlun Chip's Spin-off Listing: A Key Step in Unlocking Hidden Value

Baidu has announced that Kunlun Chip submitted its listing application to the Hong Kong Stock Exchange on January 1, 2026. This spin-off will be conducted through a global offering of Kunlun Chip shares, including a public offering in Hong Kong and allocations to institutional and professional investors.

For investors, the most critical information lies in the changes in equity structure and control. Goldman Sachs pointed out that as of August 2025, Baidu holds a 59% controlling stake in Kunlun Chip. After the proposed spin-off is completed, Baidu expects Kunlun Chip to continue as a subsidiary of the company. This means Baidu can release Kunlun Chip's market value through independent listing while maintaining control over its core computing power infrastructure within its ecosystem.

Strong Sales Growth: Revenue Expected to Reach 6.5 Billion RMB in 2026

Goldman Sachs, based on reports from Reuters and its own estimates, detailed Kunlun Chip's financial growth trajectory. The data is exceptionally bright:

• 2025 Sales: Expected to reach approximately 3.5 billion RMB.

• 2026 Sales (Forecast): With strong growth in new products and orders, expected to rise to 6.5 billion RMB.

Goldman Sachs analyzed the revenue composition, noting that Kunlun Chip's main sales and usage are currently through Baidu AI Cloud infrastructure. Although external sales are not significant by the end of 2025, they are expected to expand rapidly in 2026.

• External Sales Proportion: Goldman Sachs predicts that entering 2026, Kunlun Chip's external sales will grow rapidly, accounting for 14% of total cloud sales.

• Business Structure Optimization: Combined with more recurring and high-value subscription services (estimated by Goldman Sachs to be close to 30% of cloud revenue), this means that in 2026, this type of high-quality revenue will account for 43% of Baidu Cloud's total revenue.

Kunlun Chip is not only a contributor to sales figures but also a key part of Baidu's full-stack AI cloud capabilities (chips, deep learning framework PaddlePaddle, Qianfan MaaS platform/base model, application layer), forming an efficient feedback loop.

Valuation Benchmarking: Huge Valuation Space if Compared to Cambricon

This is the most exciting part of the entire research report for investors. Goldman Sachs, by comparing peer valuations, demonstrated the "option value" that is not fully priced in Baidu's current stock price.

Peer Comparison Data:

• Cambricon and Moore Threads: According to Goldman Sachs' estimates and Reuters' consensus expectations, the trading prices of these two peer companies are about 40 to over 100 times their estimated sales for 2026 (P/S)

• Birun Technology: Newly listed in Hong Kong, Birun Technology currently has a valuation of HKD 80 billion after its IPO.

• Kunlun Core's Scale: Goldman Sachs pointed out that based on its estimates, by 2026, Kunlun Core's sales will significantly exceed those of Moore Threads and Birun Technology, although it will lag behind Cambricon.

Valuation Sensitivity Analysis of Baidu's Equity Holdings:

1. Conservative/Benchmark Range (5x-20x P/S): If applying a 5x price-to-sales ratio (the target multiple for Baidu Cloud in Goldman Sachs' SOTP model) to a 20x price-to-sales ratio (similar to the trading multiple for Cambricon's expected sales by the end of 2025), the valuation range for 100% equity in Kunlun Core would be USD 5 billion to USD 18 billion. Correspondingly, the value of Baidu's 59% equity stake would be: USD 3 billion to USD 11 billion. This accounts for 6% to 23% of Baidu's current market value.

2. Optimistic/Benchmark Range (40x P/S): If applying a 40x price-to-sales ratio for 2026 (similar to Cambricon's current 2026 multiple), the implied valuation of Kunlun Core would significantly increase. In this scenario, the value of Baidu's 59% equity stake would reach USD 22 billion. This accounts for 45% of Baidu's latest market value.

Investment Insights and Subsequent Catalysts

Goldman Sachs maintains a "Buy" rating on Baidu, with an SOTP (Sum of the Parts) target price of USD 155 (HKD 151).

Goldman Sachs believes that Baidu is transitioning from traditional advertising/search business to non-search business, and the non-search business (expected to account for over 50% of Baidu's core revenue by 2027) is being driven by AI accelerators.

For Baidu Cloud business, Goldman Sachs assigned a 5x 2026 EV/Sales multiple in its valuation model and noted that GPU-based subscription services have higher profit margins and recurring revenue compared to traditional CPU-based project-based cloud services.

Investors should closely monitor the following four catalysts:

1. Announcements of new orders/product upgrades for Kunlun Core, as well as progress on its spin-off listing, which will further clarify the asset value of this subsidiary.

2. Updates on the revised shareholder return policy in the first quarter of 2026.

3. Specific steps to unlock asset value announced based on recent investor meetings.

4. Progress on the major listing conversion in Hong Kong and the Southbound Stock Connect