AI revenue accounted for more than half, and the valuation logic shift of Baidu Inc Sponsored ADR Class A (BIDU.US) is driving a return to value.

On the evening of August 18, Baidu Inc Sponsored ADR Class A (BIDU.US) released its second-quarter financial report, showing that total revenue for the quarter reached 31.3 billion yuan, with AI business revenue at 12.5 billion yuan, accounting for 50% of the general business revenue of Baidu Inc Sponsored ADR Class A. The consistent over half of AI business revenue for two consecutive quarters forces the market to acknowledge a situation: that the global top institutions and asset management firms are collectively shifting their attitude towards Baidu Inc Sponsored ADR Class A. According to the 13F filings for the second quarter of 2026, legendary Wall Street investor Stanley Druckenmiller's Duquesne family office, after liquidating its position in Alibaba in the fourth quarter of 2023, established a position in Chinese concept stocks for the first time in two and a half years, with 88,000 shares of Baidu Inc Sponsored ADR Class A being the only Chinese concept stock in its current holdings. This action is not an isolated case: during the same period, Morgan Stanley established a new position of approximately 6.5 million shares in Baidu Inc Sponsored ADR Class A; UBS Group AG increased its holdings by 917,700 shares, up 43% quarter-over-quarter; Bank of America Corp increased by 1.087 million shares, up 305%. David Tepper, one of the most influential figures in the hedge fund realm, holds a highly optimistic view of Baidu Inc Sponsored ADR Class A. His Appaloosa Management, against the backdrop of an overall contraction in Chinese internet assets during the second quarter, uniquely added over 600,000 ADRs for Baidu Inc Sponsored ADR Class A, an 87% increase quarter-over-quarter. From Druckenmillers first return to Chinese concepts in two and a half years focusing on Baidu Inc Sponsored ADR Class A, to the simultaneous increases by Morgan Stanley, UBS Group AG, and Bank of America, and to Tepper's extreme selectivitya multidimensional, cross-strategy, and cross-capital resonance among institutions clearly conveys a key signal: the investment value of Baidu Inc Sponsored ADR Class A in AI is receiving collective recognition from top global asset management firms and leading banks. Behind this is the result of Baidu Inc Sponsored ADR Class A entering the strong realization stage of AI commercialization capable of scalable replication. With AI business revenue accounting for more than half for two consecutive quarters, this implies that of every two yuan of revenue from Baidu Inc Sponsored ADR Class A's general business, one yuan is derived from AI business. Clearly, AI has become a solid revenue foundation for Baidu Inc Sponsored ADR Class A. This marks a significant milestone for the core, cloud, model, and entity full-stack layout that Baidu Inc Sponsored ADR Class A has built over a decade, where its reusable underlying capabilities have achieved scaled commercialization. As one of the few leading enterprises globally to realize a full-stack layout in the AI industry, Baidu Inc Sponsored ADR Class A has become a barometer for observing the commercialization progress of Chinas AI industry. Its long-term true value is likely to undergo systematic reassessment as the proportion of AI revenue continues to rise, which is precisely the underlying logic for global top institutions collectively betting on Baidu Inc Sponsored ADR Class A with real money. Leading the AI office sector, scale replication solidifies the growth foundation of AI applications As the AI industry develops toward 2026, the main storyline has gradually shiftedfrom whose model is stronger to who can turn AI into real profits. Even for OpenAI, at the pinnacle of the global AI wave, it is no longer leisurely enjoying the technological dividends, but rather accelerating its commercialization amid immense profit pressure. As the AI industry enters the second half of commercialization competitions, whoever can first successfully close the loop on technology-product-business will hold the ticket to the next round of competition. AI office, as the super scenario with the highest certainty for the commercialization of large models, has become the main battlefield for the giants. In 2026, Tencent is consolidating resources from the QClaw team and others into WorkBuddy, targeting C-end office entry relying on the WeChat/Enterprise WeChat ecosystem; Alibaba is integrating three intelligent agents, QoderWork, Wukong, and MuleRun into Thousand Questions Office, building an enterprise-level AI productivity platform based on DingTalk; ByteDance is incorporating the Feishu team into Doubao and transferring the sales side to Volcano Engine, forming the To B office intelligent system of Doubao + Feishu + Volcano Engine. As giants unanimously upgrade AI office from internal competitions to group battles, Baidu Inc Sponsored ADR Class A first secured a position in the super entry of AI TO B, with its various AI application products, including Baidu Inc Sponsored ADR Class A Douzi, Kukua AI, and Miaoda, performing strongly in the market. In the AI office intelligent agents list released on August 17, Baidu Inc Sponsored ADR Class A Douzis monthly active users increased by 1063.79%, ranking first in the growth list for AI office agents. On August 10, Baidu Inc Sponsored ADR Class A Douzi launched design and finance kits, accelerating user expansion through the enhancement of AI office scenarios. Since Kukua AI officially launched version 1.0 in April 2025, it has rapidly iterated to version 4.0 within a year, becoming compatible with domestic and international products like Wenku Cloud, Oreate AI, etc. Currently, Kukua AI office MAU has exceeded 25 million, ranking first in the AI office sector. In the "Office Agent Workflow Evaluation Report" released by the National Industrial Security Center on August 5, Baidu Inc Sponsored ADR Class A Wenku scored first, solely occupying the first tier. Moreover, according to the report by Sullivan titled China's AI Native No-Code Application Generation Platform Market Research, H1 2026, Baidu Inc Sponsored ADR Class A Miaoda ranks first in the industry with a market share of 33.4%. It also leads in both core indicators of OPC/commercial monetization users and effective application creation users, with Miaoda's platform usage penetration rate ranking first in both. The impressive performance of multiple application products in the field of AI office highlights Baidu Inc Sponsored ADR Class As leading advantage in this sector, and its AI applications are accelerating their extension toward the B-end enterprise scenarios. Among them, the self-evolving intelligent agent Baidu Inc Sponsored ADR Class A Fame has had 3,000 enterprises applying for trial since its release, covering key industries such as ports, logistics, automotive, and finance. Additionally, Baidu Inc Sponsored ADR Class A Yijing has served over 100,000 clients across more than 30 industries, with an average live-stream conversion rate increase of 29%, delivery efficiency improvement of 150%, and production costs decreased by 63%. Reports from Sullivan and IDC have recognized that Baidu Inc Sponsored ADR Class A Yijing has maintained the top market share and product overall strength in the China AIDIGIHUMAN sector for two consecutive years. Baidu Inc Sponsored ADR Class As success in achieving breakout products in both C-end and B-end is no coincidencethis is an inevitable result of its "core, cloud, model, and entity" full-stack capability being reused across clients, industries, and scenarios. From Kukua AI, Baidu Inc Sponsored ADR Class A Douzi, and Miaoda leading in office scenarios, to Fame and Yijing accelerating deployment in the B-end, Baidu Inc Sponsored ADR Class A has clearly completed the technologyproductbusiness full loop for AI applications. Investors should recognize that when the same full-stack architecture can be rapidly replicated from office scenarios to many other verticals, the scale replication effect, characterized by decreasing marginal costs and increasing customer lifetime value, will continue to amplify, laying a solid foundation for Baidu Inc Sponsored ADR Class As future growth in AI application business. Full-stack capability drives multi-layer monetization, accelerating AI commercialization toward multi-scenario replication Baidu Inc Sponsored ADR Class As thorough deep restructuring of its business lines across different scenarios with full-stack AI capabilities is rarely matched among domestic tech companies; the direct return of this strategic choice is a fundamental shift in growth paradigmsthe company is accelerating its transition from a traditional internet model to a high-value, sustainable growth model driven by AI core technologies. The multi-layer commercial realization from AI cloud, Luobo Kuai Pao, Kunlun Chip, and other AI businesses serves as the most solid financial footnote for this transition. During the reporting period, Baidu Inc Sponsored ADR Class As AI cloud infrastructure revenue reached 7.3 billion yuan, a 50% year-on-year increase; among these, GPU cloud revenue skyrocketed by 283% year-on-year, further accelerating from the previous quarter's 184%, achieving three-digit growth for four consecutive quarters. The continued explosion of GPU cloud essentially reflects an expanding demand for AI training and inference computing power from clients based on public cloud services. The public cloud can simultaneously serve various clients through a unified resource pool, and clients computing power consumption continues to occur as model applications deepen. This indicates that the revenue structure of Baidu Inc Sponsored ADR Class A AI cloud is shifting from one-time project deliveries to standardized, sustainable service forms, with the business model upgrading from project execution to scaled service delivery. This upgrade to scaled service has been directly validated by market share and client structure. According to IDC data, by mid-2025, Baidu Inc Sponsored ADR Class A's smart cloud ranked first in the financial large model market, AI cloud gaming market, and embodied intelligence cloud market. Furthermore, in the first half of 2026, Baidu Inc Sponsored ADR Class A smart cloud topped the industry with a winning bid amount of 1.385 billion yuan, accounting for nearly 60% of the total bid amount among five cloud vendors, continuously maintaining its leadership. Currently, Baidu Inc Sponsored ADR Class As new full-stack AI cloud has achieved scaled deep cultivation in core industries. In the financial sector, it covers 100% of systemically important banks and over 800 Financial Institutions, Inc.; in the automotive sector, it supports the delivery of over 20 million new vehicles with L2-level auxiliary driving; in the AI hardware sector, it serves over 1,000 clients; in the embodied intelligence field, it serves over 30 clients; in addition, over 80% of central state-owned enterprises choose Baidu Inc Sponsored ADR Class As smart cloud, contributing to the scaling of intelligent agents for State Grid in over 40 scenarios. The dual leadership in market position and breadth of customer coverage clearly illustrates that Baidu Inc Sponsored ADR Class As AI cloud services are extending from internet clients to industrial scenarios, and the scale replication effect is accelerating, which is also one of the core factors driving the explosive growth of GPU cloud. Luobo Kuai Pao, as the business segment of Baidu Inc Sponsored ADR Class A with the most technological barriers, is accelerating cross-market scaled replication. Since the second quarter, Luobo Kuai Paos global operational map has markedly accelerated. It has launched fully unmanned commercial operations in Dubai, obtained the first batch of fully unmanned testing licenses in Hong Kong, and started the in-car no-safety-officer testing on Airport Island, becoming the worlds first platform to conduct fully unmanned driving tests in a right-hand drive system. At the same time, Luobo Kuai Pao has initiated open road testing in London and Switzerland and signed a strategic cooperation with TPH in Kazakhstan, marking the first entry of Chinese autonomous vehicles into the Central Asian market and filling a gap in that region. As of now, Luobo Kuai Pao has covered 28 cities worldwide, with a cumulative autonomous driving mileage of over 350 million kilometers, including over 240 million kilometers of fully unmanned mileage. The ability of the same autonomous driving technology to advance simultaneously in multiple markets with differing regulations, road conditions, and driving habits indicates that Baidu Inc Sponsored ADR Class A replicates not only a fleet but rather a combination of technology, operations, and compliance capabilitieseach new scenario provides new training material for model iteration, and the accumulation of such data is an asset that is difficult for newcomers to replicate quickly, which is also key to Luobo Kuai Pao consolidating its leading market position. Moreover, Kunlun Chip is also in a stage of rapid expansion of scaled replication. On the hardware front, the Tianchi super nodes 1.0 have been scaled for mass production, and the 256-card version of 2.0 will soon be launched, with the next-generation 512/1024 card super nodes expected to be released next year, capable of supporting trillion-parameter model training on a single node. On the delivery side, the P800 thirty-thousand-card cluster has been lit up, and since 2025, several ten thousand-card clusters have been delivered, covering various industries such as internet, finance, energy, and manufacturing, including over a hundred clients such as Tencent, with delivery scales from dozens of cards to tens of thousands of cards. On the software side, Kunlun Chip has completed adaptations for mainstream models like Wenxin, DeepSeek, GLM, and Minimax, improving inference efficiency by 50%. The three elements of large-scale clusters, customer base, and software ecology have jointly formed a complete closed loop for the commercialization verification of Kunlun Chip's self-developed chips. From the outbreak of smart cloud GPU cloud to the global operations of Luobo Kuai Pao and the large-scale computing power delivery of Kunlun Chip, Baidu Inc Sponsored ADR Class A is transforming its full-stack capabilities of core, cloud, model, and entity into various forms of commercial results, including cloud services, mobility, and computing power. When this foundation is realized across multiple tracks, Baidu Inc Sponsored ADR Class A's AI commercialization has clearly shifted from isolated verification to multi-scenario replication. The logic of pricing has shifted to market consensus, with two major catalysts accelerating the value return As Baidu Inc Sponsored ADR Class As AI business revenue proportion remains above half, a practical question stands before the capital market: how to reasonably value this company that possesses rare full-stack AI capabilities and leads in multi-track AI commercialization? In fact, the topic of Baidu Inc Sponsored ADR Class A's true value being underestimated is a persistent norm, and the core factor behind this is that the market has consistently applied traditional PE valuation methods to Baidu Inc Sponsored ADR Class A, resulting in the value of high-growth businesses like AI cloud, Kunlun Chip, and Luobo Kuai Pao being severely overshadowed by its search business. However, as AI commercialization continues to be realized and the revenue proportion of core AI business surpasses the 50% threshold, there is a gradually emerging market consensus that Baidu Inc Sponsored ADR Class As pricing should shift from traditional PE valuation methods to a new SOTP framework, which is also the core driver pushing its valuation central upward. Recently, nearly ten brokerage firms have explicitly adopted the SOTP (sum-of-the-parts valuation) method for Baidu Inc Sponsored ADR Class A, including top investment banks such as JPMorgan, UBS Group AG, Macquarie, CICC, and BOCOM INTL. Clearly, the need for a shift in Baidu Inc Sponsored ADR Class As valuation framework has become deeply ingrained in the institutional circle. JPMorgan stated that if Baidu Inc Sponsored ADR Class As value is measured using the SOTP valuation method, the valuation just for the AI business alone would reach $169 per ADS, suggesting that the reasonable value of Baidu Inc Sponsored ADR Class A in the U.S. stock market should be $230 per ADS, indicating potential for a doubling of the current stock price. On the basis of this shift in valuation framework, two factors are likely to accelerate the process of value return for Baidu Inc Sponsored ADR Class A. The first is that Baidu Inc Sponsored ADR Class A is advancing the conversion to dual primary listings on the Hong Kong Stock Exchange. On August 19, the groups CFO He Haijian stated that the board had previously approved the conversion of the Hong Kong listing status from secondary to dual primary, with the conversion process expected to be effective within this year, and the group is preparing for inclusion in the southbound Hong Kong Stock Connect after the conversion. If it coincides with the September 2026 adjustment window of the Hong Kong Stock Connect, more local capital familiar with Chinese internet, domestic computing power, and the AI industry is expected to directly participate in the pricing of Baidu Inc Sponsored ADR Class A, and the true value of its full-stack AI business may be rediscovered by southbound funds. The second factor is that the IPO of Kunlun Chip in Hong Kong is actively being promoted, and once listed, it will provide a direct catalyst for the revaluation of Baidu Inc Sponsored ADR Class A. As the core asset of Baidu Inc Sponsored ADR Class As full-stack AI architecture infrastructure layer, the listing of Kunlun Chip will provide a clear valuation benchmark for its true value. According to publicly available market information, the leading investment research firm Morningstar estimates the valuation of Kunlun Chip to be in the range of $51.04 billion to $63.8 billion; JPMorgans March report gives Kunlun Chip an independent valuation of $40 billion to $49 billion. This indicates that there is significant room for revaluation of Baidu Inc Sponsored ADR Class As value on a medium- to long-term basis. At this current point, the mismatch between undervaluation and AI high growth provides an attractive entry window for long-term funds. With the release of Q2 financial reports, Baidu Inc Sponsored ADR Class As current valuation reflects the markets phase judgment of traditional businesses, while the long-term values of AI cloud, Luobo Kuai Pao, and Kunlun Chip are yet to be fully unlocked. As expectations rise for the September inclusion in the Hong Kong Stock Connect and the potential values of its AI applications, Kunlun Chip, and Luobo Kuai Pao being reassessed by the market, the reshaping of Baidu Inc Sponsored ADR Class As valuation anchor is likely to kick off at any moment, and investors patiently waiting for the catalysts to materialize may reap substantial excess returns.