KAIYUAN SECURITIES·2025-08-22 13:13Investment Rating - The investment rating for Baidu Group is "Buy" (maintained) [1] Core Views - The report highlights that the advertising business is under short-term pressure due to the AI search transformation, leading to a downward revision of the non-GAAP net profit forecast for 2025-2027 to 19.1 billion, 21.4 billion, and 24.3 billion yuan respectively, reflecting a year-on-year growth of -29.2%, +12.2%, and +13.4% [4][5] - The report anticipates that as the macro environment recovers and AI monetization progresses, the advertising business is expected to return to growth, with generative AI contributing to cloud revenue and smart driving achieving breakeven in key regions [4][6] Financial Summary and Valuation Metrics - For 2025, the projected revenue is 124.875 billion yuan, a year-on-year decline of 6.2%, with non-GAAP net profit expected to be 19.116 billion yuan, down 29.2% year-on-year [7] - The gross margin is projected to be 46.9% in 2025, with a net margin of 15.3% and a return on equity (ROE) of 7.2% [7] - The diluted EPS for 2025 is forecasted at 6.6 yuan, with corresponding P/E ratios of 11.8, 10.5, and 9.2 for 2025-2027 [7]