 Editor’s Note: Former tech executive Jeff Brown has predicted some of the biggest tech paradigm shifts of the past two decades — including the rise of Bitcoin, Nvidia, and self-driving cars — giving his readers a chance to turn $1k into almost half a million, $277,000, and $22,500. He’s now predicting a major paradigm shift in the U.S. dollar. Click here for the details or read more below.
Dear Reader, I know this is going to sound crazy… But thanks to this brand-new law S.1582 signed by President Trump… I believe the top five banks in America could soon begin to replace every single dollar in bank accounts… With a better, more technologically advanced dollar… Making a lot of people potentially rich in the process. Click here to get the details because I believe this new law will unleash a $21 trillion money revolution that will blow everyone’s mind. As President Trump said… This new form of currency is… “The greatest revolution in financial technology since the birth of the internet itself.” Don’t be left out. If you know what to do… You could walk away from this revolution with some of the biggest gains you've ever seen. Click here now to get all the details. We have so much to look forward to, Jeff Brown
Founder & CEO, Brownstone Research
Friday's Bonus Content Why Baidu's Quiet Spin-Off Could Unlock a Major Re-RatingAuthored by Jeffrey Neal Johnson. Date Posted: 1/7/2026. 
Article Highlights- Baidu is unlocking significant shareholder value by spinning off its hardware division as an independent, publicly traded entity.
- The new subsidiary is uniquely positioned to supply high-performance computing chips to a domestic market cut off from foreign suppliers.
- Moving the hardware business to a separate entity improves capital efficiency and allows the core search business to focus on profitability.
After months of frustration and sideways trading, investors in Baidu (NASDAQ: BIDU) finally have a tangible reason to be optimistic. Over the last few weeks, the stock has risen roughly 15%, reclaiming the psychologically important $148 level. While a broader recovery in Chinese technology stocks has helped, the primary driver of this rally is a specific strategic move by management. On Jan. 1, 2026, Baidu confidentially filed for an initial public offering (IPO) of its artificial intelligence chip subsidiary, Kunlunxin, on the Hong Kong Stock Exchange. A former U.S. government advisor has released a new briefing examining potential policy developments heading into 2026 and how they could influence markets.
The presentation focuses on historical context, upcoming milestones, and why some analysts believe next year could mark a significant turning point for long-term investors. It's designed to provide perspective and help readers understand what may be unfolding before it becomes widely discussed. View the full briefing here For years the market has viewed Baidu through a single lens: the "Google of China," a legacy internet search engine reliant on advertising. That narrow view often ignored the billions the company has invested in cloud computing and hardware. The proposed spin-off signals a major valuation reset. By separating its hardware division, Baidu is unlocking value buried in its corporate structure and allowing investors to view the company as a diversified holding with high-growth assets, not just an ad platform. Filling the Silicon Vacuum in ChinaTo understand why this spin-off is moving Baidu’s stock price, investors must know what is being sold. Kunlunxin is Baidu’s unit focused on designing AI accelerators — high-performance chips used to train and run artificial intelligence (AI) models. The unit is targeting a valuation of about $3 billion (RMB 21 billion). Crucially, Baidu plans to retain a controlling stake of roughly 59%. That lets Baidu shareholders keep meaningful upside if the chip business succeeds, while giving the unit an independent market price. The timing is fortuitous. U.S. export controls have effectively blocked Chinese firms from buying the most advanced chips from American makers like NVIDIA (NASDAQ: NVDA), creating a silicon vacuum in the world’s second-largest economy. Domestic companies need high-performance alternatives and prefer local suppliers to avoid future supply-chain risk. Kunlunxin is well positioned to fill the gap: its chips already power Baidu’s internal workloads, including the Ernie Bot platform, which serves more than 430 million users. Baidu’s role as the local partner for Apple Intelligence services in China (powering AI features on the iPhone 17) also lends prestige and validation to its hardware and software stack that few domestic rivals can match. Why the Parts Are Worth More Than the WholeFrom a financial perspective, the Kunlunxin IPO is a classic sum-of-the-parts play. Large conglomerates often suffer a conglomerate discount, where the market values the whole company lower than the sum of its separate businesses. Think of it like buying a pre-assembled fruit basket: you might pay $20 for the basket even though the apples, oranges and bananas inside would cost $30 if purchased separately. The market prefers simplicity and often discounts complex bundles. Historically, Baidu’s share price moved with its core advertising business. When ad spending slowed, the stock fell, effectively assigning little or no value to its cloud and chip divisions. By giving Kunlunxin its own ticker and public valuation of about $3 billion, Baidu forces Wall Street to value the chip unit separately and add that number to the value of the search business. This strategy mirrors restructuring moves across the tech sector, such as actions by Alibaba (NYSE: BABA). Baidu’s ability to execute a confidential filing quickly signals management’s focus on boosting shareholder returns. For investors, the thesis is straightforward: you own a profitable, cash-rich search engine and gain exposure to a rapidly growing, independently valued chip company. The Efficiency Play: Cutting R&D CostsBeyond the valuation story, the split offers a concrete operational benefit: capital efficiency. Designing third- and fourth-generation AI chips is expensive, requiring billions in research and manufacturing. When Kunlunxin was fully internal, Baidu funded this R&D out of its advertising profits, weighing on the company's reported margins and making the core business look less profitable. As an independent unit, Kunlunxin can raise capital from external investors in Hong Kong to fund its research. That creates several advantages for Baidu’s financial health: - Margin expansion: Baidu Core (the search business) no longer bears the full cost of chip development, which should improve earnings per share (EPS), a key valuation metric.
- Retained upside: With a ~59% stake, Baidu still captures meaningful growth if Kunlunxin becomes a market leader, without solely funding that growth.
- Cash preservation: Baidu holds nearly $20 billion in cash. By offloading heavy chip capital expenditures, it can deploy cash for shareholder-friendly moves like share buybacks or dividends.
Risks, Rewards, and the Road AheadThe bullish case is compelling, but investors should be mindful of competitive risks. The Chinese AI sector has entered a fierce price war, kicked off by startups such as DeepSeek in 2025, which has driven down software and model costs. That software price compression can still benefit hardware makers. As AI models become cheaper and more widely used, overall usage increases — and higher usage requires more compute, boosting demand for chips. So while software margins may shrink, hardware volumes can expand. Moreover, Baidu has a mitigation advantage through vertical integration. Unlike rivals that sell only software or only hardware, Baidu controls the chip (Kunlunxin), the cloud and the app (Ernie), enabling efficiency gains that disjointed competitors may struggle to match. Baidu’s analyst community has responded positively. The consensus rating is Moderate Buy, with major firms lifting price targets: Jefferies raised its target to $181 and JPMorgan set an overweight target of $188. With the stock trading near $148, these forecasts imply meaningful upside. The spin-off appears to be the catalyst that shifts Baidu from a legacy search engine into a diversified, more efficient and highly investable AI holding company.
| 
0 Response to "Jeff Brown's Prediction: Banks Replacing Dollars Soon"
Post a Comment