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<Research>Nomura: Baidu (BIDU.US) Kunlunxin Shows Immense Potential; Stock Upgraded to Buy
Recommend 17 Positive 23 Negative 10 |
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Nomura, in its research report, upgraded Baidu (BIDU.US) to Buy, with the target price hiked from USD135 to USD140. The broker was bullish about the immense growth potential of its chip design subsidiary, Kunlunxin (KLX), which is deemed a top domestic chip designer. In the context of restrictions on overseas procurement of advanced chips, companies like KLX and BABA-W (09988.HK)'s T-head could ride on the robust growth in AI demand, Nomura considered. Baidu disclosed for the first time that its 3Q AI high-performance computing facility subscription revenue rallied 128%. Nomura estimated that KLX's revenue could touch RMB2.6 billion and RMB5.4 billion in FY2025 and FY2026, respectively, which is about 45% of the forecast revenue of domestic AI chip leader CAMBRICON (688256.SH) for the same period. Baidu's advertising business remains weak, the broker furthered. Although initiatives such as the introduction of digital humans and agents have been implemented to increase revenue sources, they were believed to be insufficient to reverse the downtrend in the business. AASTOCKS Financial News Website: www.aastocks.com |
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