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<Research>CLSA Cuts Baidu (BIDU.US) TP to US$105 as AI Search Transformation Squeezes Ad Rev.
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As BIDU-SW (09888.HK)(BIDU.US) accelerated its AI search transformation, ad revenue was subdued, prompting the company to perform weakly in 2Q25 in CLSA's expectation, the broker said in its report. Among which, the company's core revenue and adjusted EBIT were projected to sink 5% and 42% YoY to RMB25.4 billion and RMB4 billion, respectively. The broker foresaw Baidu's cloud to maintain a stable annual growth of 26% due to strong AI demand, but believed this will not be sufficient to offset the decline in ad revenue. As the transformation nears completion, the pressure may alleviate starting from 4Q25. The broker lowered its adjusted net profit forecasts for Baidu for 2025 and 2026 by 17% and 15%, respectively, and reduced the target price for US shares from US$114 to US$105, maintaining an Outperform rating. AASTOCKS Financial News Website: www.aastocks.com |
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