This article first appeared on GuruFocus.
Baidu (NASDAQ:BIDU) gave investors something to cheer on Friday after confirming plans to spin off its AI chip business, Kunlunxin, in Hong Kong.
The company said it has filed a confidential application to list Kunlunxin’s H shares on the Hong Kong Stock Exchange, and the market liked what it heard. Baidu shares jumped about 7.5% to HK$141.30, easily outperforming the broader market. The move is being seen as a way to shine a spotlight on one of Baidu’s most valuable assets, which has largely been buried inside the parent company.
Kunlunxin develops AI chips that power Baidu’s cloud and artificial intelligence platforms. Reuters has previously reported the unit was preparing for a Hong Kong IPO after a fundraising round that valued it at roughly 21B yuan, or about $3B.
Baidu said the spinoff would help Kunlunxin tap new funding, attract AI-focused investors, and sharpen management incentives. Kunlunxin is expected to remain a subsidiary after the listing, though approvals and timing are still uncertain.