Baidu Jumps Over 16% to Annual High as Rating Upgrade Serves as Catalyst

TradingKey - During Wednesday's Hong Kong trading session, Baidu Group (9888.HK) saw its share price surge over 16%, marking the largest single-day gain since March 2023, while its U.S.-listed shares (BIDU.US) also closed up nearly 8% the previous night. The surge was driven by positive developments in the artificial intelligence business and upgraded analyst ratings.

Arete Research Services LLP lifted its rating on Baidu’s American depositary receipts to buy from sell — it had held the only sell recommendation on the stock since it downgraded last May.

Arete analysts Shawn Yang and Richard Kramer noted that Baidu's sustained investment and development potential in the AI chip sector could effectively offset challenges faced by its core online advertising business, with this optimistic outlook becoming the core driving force behind the stock price surge.

According to The Information's report last week citing insiders, Baidu has begun using internally designed chips to train its artificial intelligence models.

Self-developed chip business helps Baidu reduce reliance on external AI chip suppliers like NVIDIA, which continues to be affected by changes in U.S. government export control policies. This autonomy proves particularly critical in the current complex international environment.

Its subsidiary Kunlun Tech announced in August that it had secured an AI server order from China Mobile with a contract value higher than competitors. In recent years, Kunlun Tech has also completed multiple financing rounds to support the development of its AI chips.

Beyond chip business breakthroughs, Baidu has also been active in AI model iteration and commercial application expansion. At last week's developer conference, Baidu launched its latest reasoning model, Ernie X 1.1.

Goldman Sachs Group Inc. analysts said in a report Tuesday that Baidu’s latest AI model Ernie X1.1 showed “significant improvements” that even surpass a DeepSeek model.

The latest report from International Data Corporation (IDC), titled "China AI Public Cloud Service Market Share, 2024: Comprehensive Transition to Generative AI," also corroborates Baidu's leading position in the AI field. The report shows that Baidu Intelligent Cloud ranks first in this market and has won the championship for six consecutive years, accumulating ten titles in total.

To maintain its leading edge in the fiercely competitive Chinese artificial intelligence landscape and support its massive R&D investment, Baidu disclosed a plan on Tuesday to issue offshore bonds worth 4.4 billion yuan (approximately $562 million), following its $2 billion bond issuance in March.

Additionally, Baidu reached an AI cooperation agreement with China Merchants Group, a major state-owned enterprise, on Monday. The two parties plan to focus on large language models, AI agents, and "digital employee" applications, committing to jointly drive scalable and sustainable outcomes in industrial intelligence based on China Merchants Group's practical business scenarios across transportation, finance, real estate development, and other broad sectors.