BIDU(US:BIDU) BOCOM International·2025-06-04 07:19Investment Rating - The report maintains a "Buy" rating for Baidu (BIDU US) with a target price of $99.00, indicating a potential upside of 19.2% from the current price of $83.06 [1][11]. Core Insights - Baidu's short-term profits are under pressure, primarily due to a decline in search advertising revenue, which is expected to decrease by 9% year-on-year to RMB 66 billion in 2025. This decline is partially offset by a projected 30% increase in AI cloud revenue and performance from new business segments [1][5]. - The report emphasizes the importance of monitoring the sustainability of cloud revenue growth and the global rollout of Robotaxi services, which could potentially reverse the company's valuation logic [1][5]. Financial Forecasts - The new revenue forecast for Baidu in 2025 is RMB 135,508 million, with a growth rate of 1.8%. The core business revenue is projected at RMB 107,243 million, while iQIYI's revenue is expected to be RMB 29,053 million [2][6]. - Adjusted operating profit is forecasted to decline by 7.1% to RMB 20,542 million in 2025, with an operating margin of 15.2% [2][6]. - The adjusted net profit is expected to decrease by 7.4% to RMB 19,461 million, with a net profit margin of 14.4% [2][6]. Revenue Breakdown - The report details the revenue contributions from various segments: online marketing services are projected to generate RMB 66,055 million, while cloud services are expected to reach RMB 27,941 million in 2025 [6][12]. - The operating costs are anticipated to rise, leading to a gross profit of RMB 63,858 million, reflecting a gross margin of 47.1% [12][13]. Market Position - Baidu's advertising revenue contribution has decreased to approximately 60% of total revenue, highlighting the growing significance of cloud and autonomous driving sectors [1][5]. - The report notes that AI-generated search results are increasingly impacting traditional search advertising, with AI content accounting for 35% of search results by April 2025, up from 22% in January [5][6]. Stock Performance - Baidu's market capitalization is approximately $23.25 billion, with a 52-week high of $115.13 and a low of $76.86 [4][11]. - The stock has seen a year-to-date change of -1.48% [4]. Conclusion - The report suggests that while Baidu faces short-term challenges, particularly in its advertising segment, there are significant growth opportunities in its cloud and AI-driven services, warranting a "Buy" rating [1][5].