Hua Er Jie Jian Wen·2025-09-19 09:52Core Viewpoint - Goldman Sachs significantly raised its target price for Baidu, highlighting the market's renewed focus on its substantial value beyond traditional search, particularly its full-stack AI capabilities, accelerated commercialization of autonomous driving, and large cash reserves [1][3]. Group 1: Target Price Adjustment - Goldman Sachs analysts increased Baidu's US stock target price from $90 to $154 and the Hong Kong stock target price from HKD 88 to HKD 150, maintaining a "Buy" rating [1]. - Baidu's stock price has risen over 40% since early September, indicating a shift in market focus towards its non-search business growth potential [1]. Group 2: Valuation Reassessment - The core of the valuation reassessment is that Goldman Sachs assigned a combined SOTP valuation of nearly $200 per share for Baidu's AI cloud, Apollo Robotaxi, and net cash and long-term investments, significantly exceeding the traditional search business value of approximately $26 per share [3]. - Despite the recent stock price surge, Baidu is still seen as having a favorable risk-reward ratio, with potential upside of up to 60% in a bullish scenario [3]. Group 3: AI Cloud Business - Goldman Sachs views Baidu's AI cloud as having a core competitive advantage due to its complete full-stack capabilities, including self-developed Kunlun chips, deep learning platforms, AI models, and software applications [4]. - The valuation for Baidu's AI cloud business was raised to $25 billion (equivalent to $72 per share), with the valuation multiple increased from 3x to 5x P/S, aligning it with Tencent Cloud [4]. - Driven by demand for AI training and inference, Baidu's AI cloud achieved a 32% year-over-year growth in the first half of 2025, significantly outpacing previous levels [4]. Group 4: Apollo Robotaxi - In the autonomous driving sector, Goldman Sachs doubled the valuation of the Apollo Robotaxi business from $4 billion to $8 billion (equivalent to $23 per share) due to accelerated fleet deployment and improved profitability from the lower-cost RT6 model [6]. - The Apollo fleet exceeded 1,000 vehicles by Q2 2025 and is expected to reach 2,500 vehicles by year-end, outpacing domestic competitors [6]. - The manufacturing cost of the sixth-generation unmanned vehicle RT6 is below $30,000, achieving breakeven unit economics in densely populated cities like Wuhan [6]. Group 5: Cash and Balance Sheet - Goldman Sachs noted that Baidu's substantial cash on its balance sheet is being revalued by the market, with $22 billion in net cash and $6 billion in long-term investments valued at $81 per share in the SOTP valuation [7]. - Historically, the market discounted this cash value, but Baidu's proactive stance on stock buybacks and potential dividends is expected to unlock this cash value [7]. - Despite increased capital expenditures on AI and chips, Baidu's core search business and profitable cloud operations continue to generate stable cash flow to support new business investments [7].