Baidu, Inc. Hold Rating: AI Search Monetization Challenges and Promising AI Cloud Growth

Sachin Mittal, an analyst from DBS, maintained the Hold rating on Baidu, Inc. Class A (9888 – Research Report). The associated price target was lowered to HK$85.00.

Sachin Mittal has given his Hold rating due to a combination of factors affecting Baidu, Inc. Class A. The company’s core advertising revenue is expected to face ongoing challenges, primarily due to a shift towards enhancing AI search capabilities, which has not yet been monetized. This shift is anticipated to result in an 8% decline in advertising revenue for FY25, contributing to a less optimistic earnings outlook for the upcoming years.
On the other hand, Baidu’s AI cloud business shows promise, with significant growth driven by the company’s AI Ernie model and expected further expansion with the launch of the ERNIE 4.5 model. Despite this, the overall outlook remains cautious, with the stock’s potential for re-rating hinging on clearer monetization strategies for its AI search business. The target price has been adjusted to HKD85/USD86, reflecting the mixed prospects of Baidu’s core and emerging business segments.

According to TipRanks, Mittal is a top 100 analyst with an average return of 22.1% and a 72.99% success rate. Mittal covers the Technology sector, focusing on stocks such as Cognizant, Infosys, and Accenture.

In another report released on May 22, Macquarie also maintained a Hold rating on the stock with a HK$88.00 price target.