Xin Lang Cai Jing·2025-08-04 13:00Core Viewpoint - Baidu Group is expected to face a decline in total revenue and core revenue in Q2 2025, with a projected total revenue decrease of 4.2% year-on-year to 32.52 billion RMB and a core revenue decline of 3.6% to 25.72 billion RMB, indicating that the company's performance is at a low point due to pressure on its high-margin advertising business [1][2]. Group 1: Online Marketing Business - The online marketing service revenue is anticipated to drop by 15.7% year-on-year in Q2 2025, primarily due to the transitional impact of AI integration in search services, which is putting pressure on core advertising revenue [2]. - Baidu's search products and interaction methods are undergoing a comprehensive upgrade, enhancing AI experiences with features like natural language input and multi-modal queries, which may improve user engagement and conversion efficiency in the medium term [2]. - The launch of the ad-free smart search app "TizzyAI" focuses on AI-driven content aggregation and logical reasoning, showing promising performance in search purity and content structuring [2]. Group 2: Non-Online Marketing Business - The non-online marketing business revenue is expected to grow by 27% year-on-year in Q2 2025, with cloud services contributing significantly to this growth [2]. - The "LuoBo Kuaipao" service continues to grow, with a 75% year-on-year increase in order volume in Q1 2025, and a strategic partnership with Uber aims to deploy thousands of autonomous vehicles in Asia and the Middle East [3]. - Baidu's Wenxin large model technology is evolving, enhancing multi-modal and reasoning capabilities, which may increase enterprise deployment willingness [3]. Group 3: Financial Forecasts and Valuation - Baidu's total revenue is projected to decline from 134.6 billion RMB in 2023 to 129.1 billion RMB in 2025, with a negative growth rate of 3.04% [5][10]. - The Non-GAAP net profit is expected to decrease significantly from 28.75 billion RMB in 2023 to 17.96 billion RMB in 2025, reflecting a growth rate decline of 33.48% [5][10]. - The company has adjusted its valuation multiples for advertising, smart cloud, and other businesses to 10.0x PE and 2.5x PS, with a target price reduction to 109.4 HKD, while maintaining a "buy" rating due to strong demand in the AI model industry [4].